A recession does not arrive after all – it is already there, according to at least one CEO of the airline.
The CEO of Southwest Airlines (LUV), Bob Jordan, told Bloomberg that the demand had made efforts in recent months, the interior trips falling more than he has ever seen apart from the COVVI-19 pandemic. The executive expects the second quarter of Southwest’s revenues to drop by six percentage points after decreasing three points in the first quarter.
“I don’t care if you call this a recession or not, in this industry, it is a recession,” the CEO told Bloomberg.
The Southwest depends more on interior leisure trips than other airlines, such as Delta (DAL), which obtain a large part of their business trips. For this reason, the Southwest is more vulnerable to changes in consumers’ desire to pay money for travel.
“When consumers are uncertain, they retreat,” said Jordan. “Consumers can immediately stop spending.”
Southwest declared an increase of 10.9% in annual incoming of income as part of its first quarter results on Wednesday, but the increase in labor and maintenance costs – plus the mild reservation – weighed on the results. The company based in Dallas withdrew its directives in 2025 and 2026 after reporting an adjusted loss of $ 0.13 per share. The Southwest now reduces the capacity of Q2 and slows down hiring, citing “continuous uncertainty” linked to the American-Chinese trade war.
“We were very touched on the side of demand by prices, then on the erosion of consumer confidence,” Jordan told Yahoo! Finance.
Southwest shares fell 0.6% early Friday after adding 3.6% on Thursday.
Like Southwest, other airlines, including American (Aal), Alaska (Alk) and Delta, have drawn their income guides in recent days. “There is no way to predict exactly where the demand goes,” American CEO Robert Isoom told CNBC (CMCSA).
Delta declared a profit of $ 240 million and income growth of 6% on the other. The demand for premiums and companies has been maintained – but wider growth, warned Delta, blocked the weight of prices and economic volatility.
CEO Ed Bastian said the airline doubles the “cost discipline and networks optimization” and will adjust the capacity to the need “in response to the conditions of change.
—Catherine Baab contributed to this article.
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