Southwest Airlines backtracks on a full schedule by year-end as recovery stalls
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Now, those plans are fizzling like a dying sparkler on the Fourth of July.
Dallas-based Southwest plans to fly about 25% less than it flew at the end of 2019 by December, CEO Gary Kelly said during the airline’s second quarter earnings call on Thursday. The flight reductions are still in the works and will be loaded in its schedule over the coming weeks.
“And, if demand is like it is today, that won’t be enough,” Kelly added in a dour note on the outlook. “We’ll have to be smaller.”
The recovery in air travel has unequivocally stalled. Every carrier from Delta Air Lines to United Airlines — and now Southwest — have acknowledged that when the resurgence of COVID-19 was leading the news cycle around the July 4 holiday, Americans stopped buying tickets to travel.
Data from trade group Airlines for America (A4A) shows net passenger bookings — new reservations minus cancellations — for U.S. domestic travel have held steady at down roughly 80% year-over-year since the beginning of July.
Southwest Airlines reports a $1.5B net loss excluding special items in 2Q20.
— Edward Russell (@byerussell) July 23, 2020
Southwest posted a rare quarterly loss during the three months ending in June. The airline lost $1.5 billion before special items during the period — a number that was better than the losses at some of its larger competitors — but was a fraction of its usual size, flying just 45% of what it flew a year ago.
The carrier will be a little bigger during the three months ending in September. Southwest president Tom Nealon said Thursday that it plans to fly about 70% to 80% of what it flew last year during the same period, but he noted that they “have more work to bring it down further.”
Despite having to delay plans to resume a full schedule, Southwest plans to continue serving all of the U.S. cities on its route map. This includes Hawaii, where it continues to serve five cities — though its only connection to the U.S. mainland is between Honolulu (HNL) and Oakland (OAK).
Passenger and crew safety from COVID-19 remains a top priority for Southwest. The airline will implement stricter rules on wearing masks onboard its Boeing jets next week in response to what Nealon said were “too many exceptions to the policy.”
Southwest has also extended caps on the number of seats it will sell on any given flight by a month to the end of October. The caps are designed to allow for a semblance of social distancing onboard.
In addition, Kelly said the nearly 17,000 staff that took voluntary early departure packages or extended unpaid leave are enough to allow it to avoid pay cuts or furloughs through the end of the year.
.@southwestair CEO Gary Kelly. “And while we have a plan for pay cuts benefit cuts furloughs and layoffs, we do not intend to pursue any of those… at least through the end of this year.”
— Kyle Arnold (@kylelarnold) July 23, 2020
But Southwest’s leadership team is not under any impression that they — or the airline industry — is out of the coronavirus woods yet.
“We know enough now that we’ve got a long, long way to go,” said Kelly calling the recovery a “long, saw-toothed slog.”
Featured image by John Gress Media Inc/Shutterstock.
Welcome to The Points Guy!
WELCOME OFFER: Up to 100,000 bonus miles
TPG'S BONUS VALUATION*: $1,040
CARD HIGHLIGHTS: 3X miles on United® purchases
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80K bonus miles after you spend $5,000 on purchases in the first 3 months your account is open. Plus, an additional 20K bonus miles after you spend $10,000 in the first 6 months
- $250 Annual Fee
- Earn 3X miles on United® purchases, 2X miles at restaurants, on select streaming services & all other travel, 1X on all other purchases
- Earn 3X miles on United Airlines purchases
- Earn 2X miles at restaurants and on select streaming services
- Earn 2X miles on all other travel
- Earn 1X mile on all other purchases
- Each year, receive a $125 credit on United® purchases and two 5k-mile anniversary award flight credits. Terms apply.