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Southwest Airlines says travel picked up in August, but still expects a tough fall

Aug. 19, 2020
4 min read
Southwest Airlines says travel picked up in August, but still expects a tough fall
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Americans still want to get in that last trip of summer before settling in for what could be a fall "twindemic" of both the coronavirus pandemic and a severe flu season.

Southwest Airlines has seen an uptick in bookings for August travel after a plateau in July, the Dallas-based carrier told investors on Wednesday. The increase is enough to shave $3 million off its daily losses, with third quarter cash burn now set to come in at $20 million a day.

But all that glitters is not gold. Southwest does not anticipate the increased bookings to continue into the fall. After flying roughly 73% of what it flew a year ago in August, the airline forecasts flying around just 60% in September and as little as half in October.

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"Year-over-year revenue declines remain significant, and passenger demand and booking trends remain inconsistent," Southwest told investors.

Southwest's guidance is the latest evidence that the "autumn of discontent" could hit airlines hard. Since June, Wall Street analysts have warned that the industry faces a tough situation after Labor Day, when the leisure travelers that have so far driven the travel recovery since May traditionally fly less and business travelers pick up the slack. But in 2020, most corporate flyers remain grounded due to the continuing pandemic and are not expected to return in significant numbers until next year.

Other airlines are also gearing up for a rough ride. Spirit Airlines plans to fly just 65% of its 2019 schedule in September compared to about 82% in July. And American Airlines is considering axing up to 30 smaller cities as it retrenches to save money.

Related: Southwest Airlines backtracks on a full schedule by year-end as recovery stalls

While Southwest plans to fly less this fall, it does not plan to drop any cities from its map. What is disappearing are many longer nonstop flights. The carrier is cutting a number of those in favor of connections over some of its larger bases, such as Baltimore/Washington (BWI), Denver (DEN) and Nashville (BNA).

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“While we have fewer flights, we do still have itineraries,” Southwest CEO Gary Kelly told The Texas Tribune on Aug. 12. “We’re trying to maintain the integrity of our network. So when you’re ready to fly, there’s a way to get to Portland [Oregon] or a way to get to Boston.”

The carrier has even added some routes, including new seasonal service to Steamboat Springs, Colorado (HDN), in an effort to fly where travelers want to go. Still, the number of suspended routes far outweighs the number added.

Related: Airlines face a tough fall after that summer uptick

In July, Kelly said Southwest expected to fly about a quarter less in December than what it flew at the end of 2019. Traveler appetite to fly this fall will determine how close to reality that forecast is.

Southwest's pessimistic outlook for the fall is not enough for it to take another round of government aid. The airline has declined a $2.8 billion loan under the federal coroanvirus aid package, or CARES Act, that was passed in March. The loan would have come from a separate pot of $25 billion allocated to airlines than the $25 billion earmarked specifically for employee salaries.

At the same time, the airline backs the push by labor unions for an extension of the payroll support program through March 2021. The extension could be included in the proposed new stimulus package that is currently stalled in Congress.

Related: Should Congress dole out more money for airline employees?

Featured image by AFP via Getty Images

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Apply for American Express® Gold Card
at American Express's secure site
Terms & restrictions apply. See rates & fees
Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
4XEarn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
3XEarn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • Intro Offer
    Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

    60,000 bonus points
  • Annual Fee

    $250
  • Recommended 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.

    670-850
    Excellent/Good

Why We Chose It

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

Pros

  • 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
  • 3x on flights booked directly with the airline or with Amex Travel
  • Welcome bonus of 60,000 points after spending $4,000 in the first six months

Cons

  • Weak on travel outside of flights and everyday spending bonus categories
  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and 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, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees