COVID variant causes Southwest to lower hopes for 3Q profit

Southwest Airlines said Wednesday that it no longer expects to turn a profit in the third quarter as a surge in COVID-19 infections fueled by the highly contagious delta variant darkens the outlook for travel.

The disclosure comes just three weeks after Southwest CEO Gary Kelly said the airline had passed a milestone by earning a profit in June.

The airline said Wednesday that it was profitable again in July, even excluding government pandemic relief, but it believes that the pandemic's shadow makes it less likely that the airline can repeat the feat in the third quarter.

Southwest is the second U.S. airline to lower expectations because of the highly contagious delta variant of COVID-19. Last week, Frontier Airlines, a smaller discount carrier, blamed the virus for causing bookings to weaken more than the usual decline that occurs each year as summer winds down.

Savanthi Syth, an airline analyst for Raymond James, predicted that other airlines will lower their revenue projections but probably not until early September.

In another sign of the impact that the surge in virus cases is having on travel, United Airlines announced last week that it will require workers to be vaccinated against COVID-19. Hawaiian Airlines followed with a similar announcement Monday, and Frontier will require workers who don't get vaccinated to undergo “regular” testing for the virus.

United CEO Scott Kirby took part in an online meeting Wednesday with President Joe Biden, who encouraged Kirby and two other CEOs to talk to industry peers about vaccinating their workers. Kirby told CNN there was no discussion of requiring passengers to be vaccinated.

Southwest, American Airlines and Delta Air Lines have stuck to their strategy of encouraging workers to get the shots but not requiring it.

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