Southwest to Offer Cargo-Only Flights Amid Coronavirus Woes

Southwest Airlines Co. LUV will be offering cargo-only flights for the first time in its 48-year history as air-travel demand continues with the downward trend amid rising coronavirus concerns.

The cargo flights will be offered on a charter basis with only those needed such as the pilots and other crew members, on board. The Dallas, TX-based low cost airline will carry the freight in the bellies of its Boeing 737 aircraft.

With passenger demand plummeting, the cargo-only operations should help Southwest recoup a bit of the lost revenues. Due to significant drop in passenger bookings as a result of the coronavirus outbreak, the Zacks Rank #3 (Hold) company issued a bearish view for total revenue per available seat miles (TRASM: a key measure of unit revenues) for first-quarter 2020 (detailed results will be available on Apr 23). The carrier expects first-quarter TRASM to have either dipped 2% or increased up to 1% (previous expectation: increase in the 3.5-5.5% range) from the year-ago figure. Moreover, first-quarter operating revenues are expected to have declined between $200 and $300 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Due to falling demand, shares of Southwest have plunged more than 41% since the beginning of February compared with the industry’s 49.7% depreciation.

Price Performance Since February


 

Coming back to the cargo operations, Southwest joins the likes of American Airlines AAL, Delta Air Lines DAL and United Airlines UAL in offering the cargo-only services. American Airlines is operating two cargo-only flights from the United States to Germany. Further, Delta recently started offering cargo-only flights between Shanghai and Detroit, carrying medical supplies.

Additionally, last week, United Airlines launched several cargo-only flights, such as those from Los Angeles International Airport to Hong Kong, London and Shanghai. Freight and mail were some of the cargoes that these planes carried.

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Southwest Airlines Co. (LUV): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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