Updated Jan. 26, 9:55 p.m. Eastern
The House has passed and President Donald Trump has signed a bill to end the shutdown through Feb. 15.
Updated Jan. 25, 5:15 p.m. Eastern
A measure to halt the partial federal government shutdown has passed the Senate and moves to the House.
The government shutdown has cost Southwest Airlines as much as $15 million in lost bookings, executives said in Southwest's fourth-quarter earnings call.
The shutdown, which is expected to end Friday afternoon, pending votes in Congress and signature by the president, stood to delay the carrier's launch of service to Hawaii. While the FAA already has approved Southwest's Hawaii plans, the carrier still needs to demonstrate its ability to execute them, chairman and CEO Gary Kelly said. FAA personnel authorized to return to work during a shutdown are limited largely to those with duties related to safety. If the shutdown lifts, Southwest's service to Hawaii still could begin within a few months. On an earnings call that preceded Trump's announcement, Southwest COO Mike Van de Ven said, "If the shutdown ends within a week, I think we have a reasonable chance of beginning the service in the first quarter of 2019. Otherwise, it will likely be within the second quarter."
Hawaii is Southwest's primary focus in capacity growth this year and will account for about half its overall capacity growth in 2019, EVP and CFO Tammy Romo said. Although international load factors were "way up year over year" in the fourth quarter, Southwest has no plans to add international service this year because of the focus on Hawaii.
At the end of March, the carrier will end its operations to Benito Juarez Mexico City International Airport, one of its international markets that tended to be more business than leisure travel. "Given where we are right now, we just have better opportunities in deploying that capacity," Kelly said. "The better performing destinations for us right now are the leisure destinations."
Domestically, Southwest has seen "corporate business strength," Southwest president Tom Nealon said. Passenger revenue in the fourth quarter increased 8.6 percent year over year to $5.3 billion, and ancillary revenue rose 7.5 percent year over year to $342 million. Traffic rose 4.7 percent as capacity increased 6.5 percent, dropping load factor 1.5 percentage points to 83.5 percent. The average fare in the fourth quarter increased 6.3 percent year over year to $154.42.
While executives were optimistic on demand trends for this year, Kelly cautioned that the shutdown, which he called "maddening," could continue to disrupt those. His comments preceded Trump's announcement that he would sign a deal to halt the shutdown for three weeks, through Feb. 15. "Everyone needs to be on guard that this shutdown could harm the economy and could harm air travel," Kelly said. "We will do everything we can to find a way to work through this slop, contain the damage and keep our finances strong."
Southwest reported a net income of $654 million for the quarter, compared with $1.7 billion in the fourth quarter of 2017, which included a $1 billion income tax benefit. For the full year, net income was $2.5 billion, down 26.6 percent year over year.
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