Southwest recovers dividend after three years as travel recovers

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southwestern airlines is restoring the quarterly dividend that was suspended at the start of the Covid-19 pandemic in 2020, in the latest sign of a recovery in the aviation industry.

The $54 billion in federal aid that airlines received to continue paying employees during the pandemic banned dividends and share buybacks, restrictions that were lifted this fall.

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The 18-cent dividend will be paid after the market closes on Jan. 31, Southwest said in a statement Wednesday ahead of an investor presentation.

US airlines returned to profitability and executives were optimistic about continued travel demand, even as business leaders in other industries, including banking and technology, warned of economic weakness.

“Today’s announcement reflects the strong recovery in air travel demand and the company’s strong operating and financial results since March 2022,” Southwest CEO Bob Jordan said in a press release.

Southwest reaffirmed that it expects fourth-quarter revenue to rise 17% from 2019, pre-pandemic, a sign that higher fares continue to spur airline recovery.

The Dallas-based airline said it expects to increase capacity next year by 15% compared to 2022.

At the company’s presentation to investors on Wednesday, executives were expected to answer questions about costs, hiring pilots and pending labor contracts.

Southwest is currently in intense negotiations to secure new contracts with its pilots and cabin crew.

“I think today they really put an exclamation mark on their priorities,” Casey Murray, president of the Southwest Airlines Pilots Association, a pilots union, told CNBC. “Today, with the announcement of dividends, without any real commitment to close this contract, this is disappointing.”

Southwest pilots picketed outside the New York Stock Exchange ahead of the Investor Day presentation.

Aircraft are now subject to new cockpit alert standards, and lawmakers did not issue a waiver before a year-end deadline under rules imposed following the two Max crashes in Indonesia and Ethiopia.

Southwest said its 2023 capital expenditures will be between $4 billion and $4.5 billion, mostly payments to Boeing for new aircraft. The airline ordered 737 Max 8 and Max 7.

The carrier expects to receive about 100 aircraft next year, less than its order book, due to delays in Max 7 certification and expected problems with Boeing’s supply chain, the presentation said.

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