Southwest Airlines says the government shutdown will cost the company around $60 million in first-quarter revenue, up from its previous estimates of $10 million to $15 million.
The company said in new SEC filings that the underestimation was due to a continued softness in passenger demand and bookings as a result of the shutdown. Based on current trends and the latest information regarding the shutdown’s effect, Southwest now predicts its year-over-year growth will increase by 3 to 4 percent – down from previous predictions of 4 to 5 percent growth.
Southwest Airlines’ stock closed at $54.41 Wednesday, down 5.7 percent.
A clearer view of the shutdown’s impact on Southwest comes in the middle of a tough week for the airline. The airline has also found itself at the center of a year-long investigation by the Federal Aviation Administration into how it calculates baggage weight and the impact it could have on how pilots respond to emergencies, according to the Wall Street Journal.
On Tuesday the airline issued an apology to customers for “extremely long delays” and flight cancellations as mechanical trouble continued to take its planes out of service.
Goldman Sachs has downgraded Southwest to a sell rating from a neutral one and lowered its 2019 estimate for earnings per share. Sachs bases its analysis on Southwest’s Hawaii routes that have been delayed to a point where they will now become more costly for the company.
Southwest experienced delays in launching its long-anticipated Hawaii route after the 34-day government shutdown prevented the company from receiving a necessary FAA certification. The airline completed a successful test flight for its certification earlier this month, and its executives have said the route could be up and running as early as March.
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