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.
Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.
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
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 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. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
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 $8,000 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.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.