Southwest posts $91-million loss

Southwest Airlines Co., still reeling from a dive in air travel, held out hope Thursday that the plunge may have leveled off.

The carrier, which until last summer had gone 17 years without a quarterly loss, posted its third consecutive loss Thursday, a $91-million deficit for the first three months of 2009. Revenue in the period tumbled 6.8% from a year earlier to $2.36 billion. The company predicted another year-over-year decline in revenue in the current quarter.

“We face the toughest revenue environment in our history,” Chief Executive Gary C. Kelly said in a news release, citing a drop in flying by full-fare business travelers. “We are not immune to the challenges the worldwide recession is having on air travel.”

In a conference call with analysts, however, Kelly said the decrease in business travel “seems to have bottomed out in March.” But he added, “I’m certainly not ready to call the bottom just yet.”

John Pincavage, an industry analyst in Westport, Conn., said the recession made it almost impossible to predict how Southwest or any other airline would perform in the next year.

“With airlines, a lot of the costs are fixed costs: labor, fuel, planes, maintenance,” Pincavage said. “In a period like the one we are in now, you’re getting less customers, so you’re having to lower ticket prices, but your costs of running an airline aren’t going down.”

The carrier’s news wasn’t well received on Wall Street. Southwest’s stock tumbled 54 cents, or 7.1%, to $7.10.

The $91-million first-quarter loss amounts to 12 cents a share. In the first quarter of last year, Southwest earned $43 million, or 6 cents a share.

The Dallas-based company said it benefited significantly from the slide in energy costs in the last year, even though the carrier recorded a $51-million hit to the bottom line in the first quarter because of contracts that locked in higher than current market prices for jet fuel. Those contracts had paid off big for Southwest last year when the oil market was sky-high.

Without that charge, Southwest would have lost $20 million, or 3 cents a share. On a comparable basis, analysts had expected a narrower loss.

To speed its return to profitability, Southwest said Thursday that it would offer buyout packages to nearly all of its 35,000 employees but didn’t say how many jobs it wanted to eliminate. The company also said it was freezing salaries for senior managers.

If it can’t pull out of the red, the airline said it might ask union workers to forgo pending pay raises.

Southwest also said it would cut capital spending through 2010 by about $1.4 billion, in part by delaying deliveries of some aircraft.

One thing the company said was not under consideration: expansions into New York’s LaGuardia Airport and Boston’s Logan International Airport planned for this year.

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nathan.olivarezgiles@latimes.com