Southwest Airlines CEO Gary Kelly was frustrated by the U.S. government shutdown even when he thought the resulting loss in ticket sales would be just $15 million.
Turns out, it will be four times that much — around $60 million, the Dallas-based carrier said in a regulatory filing Wednesday.
“I will sum it up in a word: It’s maddening,” Kelly told investors during a January call detailing the Dallas-based company’s goals for the year and its performance in the last 3 months of 2018. “Everyone needs to be on notice, on guard, that this shutdown could harm the economy, and it could harm air travel. We will do everything we can to find a way to work through this slop.”
Southwest’s higher estimate is an ominous indicator for U.S. airlines that had warned investors earlier in the year that the 35-day shutdown, the longest in U.S. history, could hurt sales in the first 3 months of 2019. The partial closure, which began in late December when President Trump refused to sign any government-funding bill that didn’t include $5.7 billion for a wall he wants to build along the southern U.S. border, shaved an estimated $1.2 billion a week from the U.S. economy.
Ultimately, “softness in passenger demand and bookings as a result of the government shutdown” continued even after federal offices reopened under a deal allowing for three weeks of talks between the Republican-led Senate and the Democratic-controlled House of Representatives, executives wrote in the filing. The subsequent compromise offered $1.4 billion for barriers along the U.S. border, and Trump signed it rather than close government offices again or force employees such as air traffic controllers to work without pay.
At the same time, he said he would declare a national emergency to obtain more money for the border barricades that were a signature promise of his 2016 campaign.
Both Southwest and Fort Worth, Texas-based American Airlines had cautioned in January that the shutdown’s effects on the industry were difficult to predict. Unions for air traffic controllers, pilots, and flight attendants, said that travel and safety might be hindered, and by the last day of the closure, a shortage of controllers was delaying hundreds of flights at two of New York City’s primary airports.
While American refused to specify the dollar amount of the shutdown’s impact on air travel in January, the airline predicted earnings would climb as much as 65 percent this year, to $7.50 a share.
