Southwest Airlines Sees 3Q Capacity Down 30%-35%, to Reduce November Schedule
September 16 2020 - 7:42AM
Dow Jones News
By Dave Sebastian
Southwest Airlines Co. said it expects third-quarter capacity to
fall 30% to 35% and plans to cut its November flight schedule, as
passenger demand and booking trends remain leisure-oriented and
inconsistent by region amid the Covid-19 pandemic.
The airline said it expects November capacity falling in the
range of 35% to 40%.
Southwest said leisure bookings modestly improved for the
remainder of September and October. It will continue limiting the
number of seats sold on each flight, with middle seats remaining
open for passengers who aren't traveling together through Nov. 30,
the company said.
The company's operating revenue fell 70% in August, compared
with a 70% to 75% decline it had expected. It forecast operating
revenue would fall by between 65% and 70% in September, narrower by
five percentage points on the range's upper end from the previous
guidance, and fall 65% to 75% for October.
Southwest posted a load factor, or the proportion of seats sold,
of 42% for August, in line with the company's guidance range. It
expects a September load factor of 45% to 50%, compared with its
prior outlook of 40% to 50%, and October load factor of 45% to
55%
August available-seat miles, a measure of capacity also known as
ASM, were down 27%. It expects ASM to fall 40% in September and by
40% to 45% in October, narrower by five percentage points on the
range's upper end from the prior outlook.
The company said its cash burn was about $19 million a day, on
average, in August. It expects average daily core cash burn of
about $17 million in the third quarter, compared with its prior
estimate of about $20 million.
Southwest said it anticipates third-quarter economic fuel costs
of $1.20 to $1.25 a gallon, compared with its prior estimate of
$1.20 to $1.30 a gallon. It continues to expect third-quarter
operating expenses, excluding fuel and oil expenses and other
items, to fall 10% to 20%.
The company said it has raised about $18.7 billion so far this
year, including $13.2 billion in debt issuances and
sale-and-leaseback transactions, $2.2 billion through a common
stock offering and $3.3 billion of Payroll Support Program
proceeds.
Southwest said it doesn't currently plan to use its loyalty
program to back additional financing, a move other airlines have
explored. It continues to have unencumbered assets worth about $12
billion, including about $10 billion in aircraft and about $2
billion in non-aircraft assets such as spare engines, ground
equipment and real estate.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
September 16, 2020 07:27 ET (11:27 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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