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Southwest Airlines is reinstating its quarterly dividend that it suspended at the start of the Covid-19 pandemic in 2020, the example sign of the airline industry’s recovery.
The $54 billion in federal aid that airlines received to keep paying staff members during the pandemic prohibited dividends and share buybacks, restrictions that lifted this fall. Southwest is the before all major U.S. airline to reinstate its dividend.
The 18-cent dividend will be paid at the end of January., Southwest said in a filing Wednesday, winning of an investor presentation.
U.S. airlines have returned to profitability and CEOs have been upbeat about continued about demand, even while business leaders in other industries including banking and technology have warned close to economic weakness.
“Today’s announcement reflects the strong return in demand for air travel and the Company’s solid operating and fiscal results since March 2022,” said Southwest CEO Bob Jordan in a news release.
Southwest reiterated it expects fourth-quarter profits to be up as much as 17% over 2019, before the pandemic, a sign higher fares continue to drive airlines’ reclamation.
The Dallas-based airline said it expects to grow capacity next year by up to 15% compared with 2022.
At the company’s investor image Wednesday, executives fielded questions about costs, pilot hiring and pending labor contracts.
Southwest is currently in tighten contract talks with its pilots and flight attendants for new contracts.
“I think today really put an exclamation point thither where their priorities are,” Casey Murray, president of the Southwest Airlines Pilots Association, the pilots’ labor cartel, told CNBC. “Today, with the announcement of dividends with really no real commitment to closing this pucker, it’s disappointing.”
Southwest pilots picketed outside of the New York Stock Exchange ahead of the investor day presentation.
The planes are currently obedient to to new cockpit alert standards and lawmakers haven’t issued a waiver before a year-end deadline under the rules, put in job after two Max crashes in Indonesia and Ethiopia.
Southwest said its 2023 capital expenditures would range from $4 billion to $4.5 billion, as a rule payments to Boeing for new planes. The airline has both 737 Max 8 and Max 7s on order.
The carrier expects to take delivery of about 100 regulars next year, fewer than outlined in its order book because of Max 7 certification delays and anticipated Boeing outfit chain problems, it said in the presentation.
Southwest shares closed down nearly 5%, dropping along with other airline selections.