Southwest Airlines may cancel your flight on short notice as it 'tactically' trims more capacity
Southwest Airlines is cancelling some flights on short notice as part of an effort to further reduce capacity as nearly all demand for air travel has evaporated amid the coronavirus pandemic.
The Dallas-based carrier will "tactically" cancel flights with few bookings several days before they operate through June, Southwest president Thomas Nealon said during an earnings call on Tuesday. Only about 10% of the airline's scheduled flights will be cancelled in this way as part of an effort to further cull capacity.
“It’s a lot easier to take capacity out than to put it back in," he said on why Southwest opted for close-in flight cancellations. Demand has hit record low levels with revenues down as much as 95% year-over-year in April and May, Nealon noted.
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The capacity cuts are needed. Southwest is fresh off its first quarterly pre-tax loss in over a decade, reporting a $144 million pre-tax loss during the three months ending in March on Tuesday. It has cut flying by up to 70% from previously published schedules in April, between 60% and 70% in May and roughly 50% in June.
Flights removed from Southwest schedules include those in "shoulder" periods, or before 7 a.m. and after 8 p.m. local time. In addition, it has reduced its popular Hawaii service to just two daily flights between Honolulu (HNL) and Oakland (OAK).
Despite the cuts, the airline only anticipates filling about 6% of seats in April, and between 5% and 10% in May. This is far below the more than 86% of seats that Southwest filled in the second quarter of 2019.
"To date, capacity cuts have not been enough," Cowen analyst Helane Becker on Southwest wrote on April 20. She added they they expected further cuts as demand sat near zero.
Related: Southwest Airlines considers selling fewer seats to allow for social distancing
Shelter-at-home orders and general fear of COVID-19 are keeping travelers at home. The Transportation Security Administration (TSA) has screened roughly 5% of the number of people as it did a year ago for over a week. One positive note: screening data suggests that travel demand has leveled off.
Southwest's cuts are not as deep as those are other airlines. Delta Air Lines will slash its April-to-June schedule by roughly 85%, and United Airlines plans to fly around just 10% of its schedule in June.
While May and June look bleak, Southwest is preparing several plans for the post-coronavirus recovery. Speaking during the call, CEO Gary Kelly described these as including one for a "U-shaped" recovery that sees demand slowly but continually rebound from the bottom, or a "L-shaped" recovery with the industry staying at the bottom for a while before traffic rebounds more quickly.
Related: Airlines add new rules as call for masks on planes gets louder
"Hopefully by July, [or] August we will begin to see some improvement that would encourage us which plan to lock down on," he said.
The plan will include ways to shrink Southwest's 61,000-strong workforce. Kelly and other executives emphasized Tuesday that they are looking at voluntary options, including unpaid leave and early retirement packages, to offer staff before they move to forced reductions.
"Right now the bias is towards shrinking the airline some, not radically," said Kelly with a note of optimism.
Related: Southwest Airlines CEO ‘fights’ to avoid furloughs, layoffs after coronavirus
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- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
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Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
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Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.