Southwest Airlines freezes hiring after losing $91 million

— -- The discount airline reported losing $91 million, or 12 cents a share, in the first three months. It ordered a hiring freeze and offered employee buyouts.

The first-quarter loss was unlike the last two quarters of 2008, when Southwest would have reported profits if not for one-time accounting items related to losses on fuel hedging contracts.

The loss reflected a falloff in air travel by people, especially for business, in the recession. It's affected all airlines, but Southwest's losses surprised some analysts because it has weathered downturns to report profits for 17 years until now.

It also affected investors. Southwest's shares closed at $7.10, down 54 cents, or 7.1%, on a day when most carriers' stocks rose slightly.

Kelly said that the slide in demand for tickets with little advance purchase — the kind bought mostly by business travelers — seems to have stopped. But he was unwilling to say the nation's travel slump has bottomed out.

American Airlines said Wednesday that it had found demand for those kinds of tickets had picked up slightly the past month.

Even if the downturn in business travel has stopped, Kelly cautioned, it doesn't signal a booming recovery is around the corner.

"I don't have any empirical evidence that (demand) is going to be worse," he said. "But I don't think it's going to be up 6% either."

Jim Corridore, airlines equities analyst at Standard & Poor's, was expecting Southwest to earn 4 cents a share, excluding one-time items. He lowered his second-quarter and full-year profit projections for Southwest.

But Corridore reiterated his "buy" recommendation on Southwest stock because the airline has aggressively tried to fill seats by offering fare sales, cut the number of seats by 5%, and shifted planes to routes that can generate more revenue.