Southwest Says Government Shutdown Cost 6x More Than Originally Thought

Feb 20, 2019

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Southwest, North America’s third largest passenger airline in terms of passengers carried, just issued an investor update to provide new guidance on the total damage attributed to the US government shutdown. What wound up being the longest government shutdown in US history ended up costing Southwest more than anticipated. A lot more.

A day prior to the shutdown ending, Southwest shared that it expected a $10 to $15 million hit due to softness in the market. Fast forward a month, and a fresh 8-K filed with the SEC ups that estimate to $60 million. That’s more than double the $25 million hit reportedly absorbed by Delta. To date, neither United nor American has publicly stated how badly the shutdown impacted their results, though the former was confident in its 2019 outlook when speaking to analysts last month.

(Marco Garcia/The Points Guy)

The filing states that since its initial estimate on Jan. 24, 2019, Southwest has “continued to experience softness in passenger demand and bookings as a result of the government shutdown.” While this has lowered its Q1 2019 estimate of operating revenue per available seat mile (RASM, or unit revenues) from 4-5% to 3-4% on a year-over-year basis, the airline is seeing “strength in close-in yields which is partially offsetting the impact of the shutdown.”

In lay terms, that’s Southwest confessing that it’s still planning to rake in plenty of cash (just not quite as much), and bookings are still strong. Cowen, an independent investment bank, seems to believe that logic. It is leaving its stock price target for Southwest unchanged at $58, though it did admit that the carrier’s cost outlook remains a challenge thanks to the build-out of its eventual Hawaii launch. Interestingly, Goldman Sachs has simultaneously downgraded Southwest to a sell, “cutting its 12-month price target to $54 from $66 due to the reduced profit forecast.”

Meanwhile, Companion Pass holders who love sun, sand and the aloha spirit couldn’t care less about those Wall Street musings. They’re focused on one number, and one number only: 808.

All images by Marco Garcia / The Points Guy.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,650

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.