Southwest shares close higher on Thursday, air carrier posts largest quarterly loss on record due to virus impact

Southwest Airlines Company (NYSE: LUV) reported on Thursday its largest quarterly loss on record during the third quarter as a result of the COVID-19 pandemic.

Still however, the company said its cash burn would be lower during the current quarter, since leisure bookings show signs of recovery.

Shares of Southwest Airlines closed higher for the sixth time in the past ten trading sessions in New York on Thursday. The stock went up 5.25% ($2.09) to $41.93, after touching an intraday high at $42.54, or a price level not seen since September 16th ($42.87).

Shares of Southwest Airlines Company have retreated 22.32% so far in 2020 compared with a 6.89% gain for the benchmark index, S&P 500 (SPX).

In 2019, Southwest Airlines Co’s stock went up 16.14%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.

Total operating revenue was reported to have shrunk 68.2% year-on-year to $1.79 billion during the third quarter.

Southwest reported a net loss of $1.16 billion ($1.96 per share) during the quarter ended on September 30th, which compares with a profit of $659 million ($1.23 per share) in the same period a year ago.

Excluding special items, the airline lost $1.99 per share during the latest quarter.

The average core cash burn is expected to be nearly $11 million per day during the fourth quarter, Southwest said. That compares with $16 million per day in Q3 and $23 million per day in Q2.

US policy makers have so far not managed to ensure another $25 billion in payroll support for air carriers impacted by the coronavirus pandemic.

“We urge our federal leaders to pass an economic relief package that includes a clean, six-month extension of the Payroll Support Program (PSP) to further protect jobs and crucial air travel,” Southwest Airlines’ Chief Executive Officer Gary Kelly was quoted as saying by Reuters.

Analyst stock price forecast and recommendation

According to CNN Money, the 18 analysts, offering 12-month forecasts regarding Southwest Airlines’ stock price, have a median target of $47.00, with a high estimate of $56.00 and a low estimate of $29.00. The median estimate represents a 12.09% upside compared to the closing price of $41.93 on October 22nd.

The same media also reported that at least 13 out of 21 surveyed investment analysts had rated Southwest Airlines’ stock as “Buy”, while 7 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.