Southwest reinstates dividend after 43 years

After a pause of more than two years, the company said it would reinstate its dividends, becoming the first major US carrier to resume the shareholder payouts after being suspended during the Pandemic as a condition of receiving government aid.

Southwest s board approved a quarterly dividend of 18 cents a share to be paid on January 31, according to a statement Wednesday. A string of consecutive quarterly payouts for 43 years ended in early 2020, the airline had notched as a result of the Pandemic lock-downs. The restriction on dividends tied to US financial aid ended in September of this year.

Chief Executive Officer Bob Jordan said in the statement that the company's strong operating and financial results since March 2022 reflect the strong return in demand for air travel and the company's solid operating and financial results.

The US carriers have expressed confidence that despite the possibility of an economic recession, the continued rebound in demand from both leisure and business travelers will continue into 2023. Southwest had hinted on investor calls about its eagerness to bring dividends back with the industry finding its footing after a slump early in the epidemic.

Financial forecasts for the fourth quarter were reiterated by the carrier on Wednesday. Southwest said unit costs that have remained elevated should decline for full-year 2023 as flying capacity expands by about 15% from this year.

Southwest will increase its capital spending to between $4 billion and $4.5 billion in 2023, and expects to average $4 billion annually in 2024 through 2026 as it takes new aircraft to replace its aging Boeing Co. 737 700 fleet. The airline will step up debt repayments now scheduled for 2025 and 2026 as it falls to a minimum cash balance of $6 billion and a revolving credit agreement, down from $13.5 billion.

The shares were little changed in light trading before the markets opened in New York. The stock dropped 7.4% this year through Tuesday's close, better than the 17% decline in the S&P 500 Index.

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