© Reuters. FILE PHOTO: A Southwest Airways plane flies previous the U.S. Capitol earlier than touchdown at Reagan Nationwide Airport in Arlington, Virginia, U.S., January 24, 2022. REUTERS/Joshua Roberts
By Rajesh Kumar Singh and Priyamvada C
CHICAGO (Reuters) -Southwest Airways Co on Wednesday turned the primary main U.S. airline to reinstate its quarterly dividend, greater than two years after suspending it within the wake of the coronavirus pandemic.
Chief Govt Officer Bob Jordan stated the reinstatement displays “the robust return in demand for air journey” in addition to Southwest’s “strong” working and monetary efficiency since March.
A rebound in journey demand has helped main U.S. carriers return to profitability this 12 months. Southwest is anticipated to submit its strongest full-year revenue in three years.
Whereas mounting financial worries have clouded the outlook for shopper spending, the Dallas-based provider stated it has seen no indicators of a slowdown in journey demand.
It expects robust leisure income tendencies to proceed into the primary quarter of subsequent 12 months. It additionally forecast an enchancment in enterprise journey.
Subsequent 12 months “is shaping as much as be a really robust 12 months with the chance to return to pre-pandemic revenue ranges,” Jordan stated on the firm’s investor assembly.
Shares of Southwest and different carriers, nonetheless, have been down 4%-5% on Wednesday on rising dangers of an financial recession in the USA.
Southwest stated it needs to reinforce returns to shareholders however declined to offer a timeline for resuming share buybacks.
As a part of the federal COVID-19 reduction bundle, airways had been prohibited from paying dividends or shopping for again their shares. The ban, nonetheless, expired in September.
Southwest can pay a quarterly dividend of 18 cents per share to shareholders on Jan. 31. The dividend payout quantities to $428 million a 12 months.
The transfer, nonetheless, drew a flak from its pilot union, which is demanding larger pay raises and higher work guidelines in a brand new contract.
“With greater than two-thirds of its labor contracts nonetheless open,…reinstating dividends simply illustrates how far Southwest has veered from its path,” stated Southwest Airways (NYSE:) Pilots Affiliation President Casey Murray.
“We will likely be picketing on Wall Road at this time,” he added.
Southwest stated it expects to have a deal on new labor contracts by the primary half of 2023.
It largely reaffirmed the outlook for the present quarter, however trimmed fourth-quarter its gasoline price forecast by about 5 cents per gallon.
The airline stated it expects to obtain 100 MAX plane from Boeing (NYSE:) subsequent 12 months.
