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Published on Wednesday, August 11, 2021

Southwest issues profit warning over Delta variant traveler concerns






Southwest Airlines has a problem with Delta - but it is not the Atlanta based rival carrier.


Southwest is increasingly fearful the surging Delta variant will wipe out any third quarter profit.


It became the first major US carrier to issue a profit warning blaming the highly infectious Delta variant which has impacted bookings, it said.


Only a month ago the airline was in upbeat mood, predicting it would be profitable for the rest of the year.


It estimates third-quarter operating revenue will be down about 20% on 2019 levels.


CEO Gary Kelly said that the airline was profitable in July but this could be wiped out by negative effects of weaker travel demand in August and September.


Not only are booking volumes weakening for the remainder of the summer season but trip cancellations are increasing.


"The company has recently experienced a deceleration in close-in bookings and an increase in close-in trip cancellations in August 2021, which are believed to be driven by the recent rise in Covid-19 cases associated with the Delta variant," Southwest said in a filing.


 

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