Southwest Airlines warns of hit from Delta variant

A U-turn from Southwest Airlines. Just last month, the budget carrier saw sunny skies ahead, forecasting it’ll remain profitable for the rest of this year.

But on Wednesday, Southwest issued a warning. It said it would be “difficult” to produce a profit in the current quarter due to the spread of the Delta variant of the coronavirus, becoming the first major U.S. carrier to warn of a hit form a resurgence in cases.

It blamed the variant for a slowdown in bookings and increased cancellations in August.

The news drove down shares of Southwest as well as rivals American, United and Delta at the market opened Wednesday, but they have since turned positive.

The wave of coronavirus cases sweeping the U.S. has caused hospitalizations to spike and cities and states like Hawaii to re-impose restrictions, threatening a recovery in demand for travel.

Earlier this year, Southwest had been among the biggest beneficiaries of easing restrictions because it mainly serves the domestic market.

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