Southwest says it expects up to $300 million revenue drop from coronavirus

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A group of Southwest Airlines Boeing 737 MAX 8 aircraft sit on the tarmac at Phoenix Sky Harbor International Airport on March 13, 2019 in Phoenix, Arizona.

A group of Southwest Airlines Boeing 737 MAX 8 aircraft sit on the tarmac at Phoenix Sky Harbor International Airport on March 13, 2019 in Phoenix, Arizona. (Ralph Freso/Getty Images/TNS)

Dallas-based Southwest Airlines says it expects revenues to decrease $200 to $300 million in the first quarter as carriers begin to see a massive toll from the spread of the COVID-19 coronavirus, the company outlined in a regulatory filing Thursday.

“The Company experienced healthy passenger booking and revenue trends for the first two months of 2020,” the company said. “However, in recent days, the Company has experienced a significant decline in Customer demand, as well as an increase in trip cancellations, which is assumed to be attributable to concerns relating to reported cases of COVID-19.”

Airlines are starting to anticipate significant losses from the spread of coronavirus with United on Wednesday saying it will reducing flying by 10% for domestic routes and 20% for international. The Chicago-based carrier will also freeze hiring and delay raises for non-union employees. JetBlue also said it would reduce flying, even though the airline only flies within North and South America.

The International Air Transport Association said Thursday that airlines worldwide could cost them $63 to $116 billion on passenger traffic alone.

Southwest said it thinks revenue per available seat mile, a key sales indicator for airlines, could decrease year-over-year in the first quarter after previously anticipating at 3.5 to 5.5% gain.

“While it is difficult for the Company to estimate the duration and severity of the impact from COVID-19, the Company remains financially strong,” Southwest said in its filing.

Major companies such as Google, Amazon and Boeing have begun limiting employee travel because of possible exposure to COVID-19 and in Texas firms such as Indeed have told employees to work from home, according to media reports

Airline executives, including Southwest CEO Gary Kelly and American Airlines CEO Doug Parker, met with President Donald Trump on Wednesday at the White House to discuss the impact of the coronavirus outbreak on business. Only hours after that, United CEO Oscar Munoz announced it was cutting routes.

United has most business in the Asia Pacific region where coronavirus outbreaks are the most prevalent, but American has also canceled flights to China, South Korea and northern Italy, the site of another batch of infections.

There have been more than 100 infections and a growing number of deaths in the United States.

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