Tag Archives: Southwest Airlines

Southwest Airlines expands Sabre GDS agreement

Southwest Airlines and Sabre Corporation have come to terms on a new full participation distribution agreement that enables the two companies to continue offering business Customers access to the carrier’s low fares and legendary Customer service in 2021 and beyond. Under the agreement, Sabre will continue to distribute Southwest’s content through traditional connectivity to corporations, government agencies, and TMCs through its global distribution system (GDS).

Southwest Airlines logo. (PRNewsFoto/SOUTHWEST AIRLINES)

“Providing our content in Sabre GDS with industry-standard capabilities has continued to be a top priority of our Customers. While we’ve been in discussions with Sabre for well over two years, we had not made much progress until recently on an agreement that balances the health of all our channels. We are thrilled to come to terms that are mutually beneficial for our Customers and continue our long-standing partnership with Sabre,” said Southwest Airlines Executive Vice President and Chief Commercial Officer Andrew Watterson. “Southwest set out with a maverick spirit to democratize the skies five decades ago with a vision to introduce a whole new way to travel. As we embark on our 50th anniversary in 2021, that vision is alive and well as we set a path to emerge from this pandemic.”

Under the agreement, Sabre will distribute Southwest Airlines flights and services through its travel marketplace, providing Sabre connected-agencies and other travel buyers with uninterrupted access to Southwest Airlines content. This agreement reflects a broader relationship between the two companies and will deliver richer capabilities to travel buyers, including improved schedule and inventory accuracy; last seat availability; and real-time booking functionality and the ability to modify Southwest bookings within Sabre. Implementation teams will work swiftly to bring Southwest online at full-participation in 2021.

 

U.S. Senate Committee on Commerce, Science, and Transportation report concerning Southwest Airlines and the FAA

 

From the Washington Post:

“The Federal Aviation Administration allowed Southwest Airlines to put millions of passengers at risk by letting the airline operate planes that did not meet U.S. aviation standards and by failing to provide its own inspectors with the training needed to ensure the highest degree of safety, according to a report released Tuesday by the Department of Transportation’s inspector general.

The strongly worded report called the FAA’s oversight of Southwest’s safety management system “ineffective” and said the agency improperly relied on Southwest’s own conclusion that repeated problems represented a “low risk, rather than requiring the airline to comply with its regulatory requirements.”

The inspector general said the “FAA cannot provide assurances that the carrier operates at the highest degree of safety in the public’s interest as required by law.”

 

Read the full report.

Southwest slows the deliveries of new Boeing 737 MAX aircraft

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Southwest Airlines has announced an updated delivery agreement with Boeing to slow down deliveries of new Boeing 737 MAX aircraft.

Southwest Airlines Boeing 737 MAX 8
(Ashlee D. Smith/Southwest Airlines)

The company will now receive only 35 Boeing 737 MAX 8s through the end of 2021.

The new plan will level out the fleet count. The first seven of those deliveries is expected this month, with the remainder arriving in 2021.

13 aircraft will be deferred to a later date.

Video:

Southwest Airlines aircraft slide show:

Southwest Airlines intends to serve Fresno and Santa Barbara

Southwest Airlines today shared its intention to bring service to Santa Barbara Airport and Fresno Yosemite International Airport in the second quarter of 2021.

Along with Palm Springs, which received its first Southwest flight on Nov. 19, 2020, the addition of Fresno and Santa Barbara will position Southwest Airlines as an option in 13 California airports before summer 2021, further deepening the carrier’s commitment to the Golden State. Southwest long has carried more air travelers to, from, and within California than any other carrier, a legacy sustained in the most recent reporting of U.S. Department of Transportation data on airline passengers traveling nonstop.

Southwest Airlines aircraft photo gallery (new livery):

Southwest Airlines aircraft slide show:

Southwest announces its schedule through August 2021 including the return to Houston (IAH) and Jackson, MS

Southwest Airlines extended its bookable flight schedule through August 16, 2021, giving Customers an ability to start booking summer vacations today. As Southwest® continues growing; it will welcome two new airports to its network, returning to both Jackson, Miss., and Houston George Bush Intercontinental Airport. Today’s publication includes initial flight schedules for service from Houston (Bush) beginning April 12, 2021. Additionally, the carrier will begin serving Jackson-Medgar Wiley Evers International Airport in Jackson, Miss. on June 6, 2021.

HOUSTON (BUSH) SERVICE BEGINS APRIL 12, 2021
Nearly 50 years after its first flight, Southwest will return to the airport it first served in Houston, Texas, George Bush Intercontinental in April 2021. This additional service at the city’s north side airport will complement Southwest’s longtime Houston operation at William P. Hobby Airport (HOU).

Starting April 12, 2021, Southwest Customers will be able to fly between Houston (Bush) and five destinations nonstop: Chicago (Midway), Dallas (Love Field), DenverNashville, and New Orleans.  These new flights are available for purchase now at Southwest.com:

Fly daily between

Houston (Bush) and:

Initial service nonstop each day up to:

One-way fare as low as:

Chicago (Midway)

2 flights each way

$79

Dallas (Love Field)

6 flights each way

$29

Denver

3 flights each way

$79

Nashville 

3 flights each way

$69

New Orleans

4 flights each way

$29

The number of seats, days, and markets for these fares are limited. 

Southwest first served Houston through George Bush Intercontinental, a point in the iconic “Texas Triangle” of original airports linked together on its first day of its operation, June 18, 1971. Southwest served Intercontinental until 1972 and again between 1980 and 2005.

Since landing in Houston, the airline has grown to become one of the largest employers in the city, employing nearly 4,000 People. Additionally, the carrier has also grown to become Hobby Airport’s largest airline, offering up to 161 flights a day to nearly 70 destinations across the United StatesCaribbean, and Latin America.

JACKSON, MISSISSIPPI SERVICE BEGINS JUNE 6, 2021
Also returning to the Southwest map in 2021 is Jackson, Miss., with service beginning on June 6, 2021. Southwest will serve Mississippi for Customers across the country through three nonstop routes to and from JacksonAtlanta, Baltimore/Washington, and Houston (Hobby).

Fly daily between

Jackson and:

Initial service nonstop each day up to:

One-way fare as low as:

Atlanta

3 flights each way

$49

Baltimore/Washington

1 flight each way

$79

Houston (Hobby)

3 flight each way

$49

The number of seats, days, and markets for these fares are limited. 

Southwest previously served Jackson from 1997 to 2014.

LONG BEACH GROWS WITH NEW ROUTES
Southwest will invest more service in Long Beach, Calif., bringing more destinations from the carrier’s fifth airport served in the L.A. Basin and giving travelers across the carrier’s expansive network easier and quicker access to Long Beach. Today, the carrier announced new daily service nonstop between Long Beach and five airports beginning March 11, 2021: Dallas (Love Field), Houston (Hobby), Chicago (Midway), Reno, and St. Louis.

Fly daily between

Long Beach and:

Initial service nonstop each day up to:

One-way fare as low as:

Houston (Hobby)

1 flight each way

(March 11-April 11)

Then, 2 flights each way

$69

Chicago (Midway)

1 flight each way

(March 11-April 11)

Then, 2 flights each way

$69

St. Louis

1 flight each way

$89

Reno*

1 flight each way

$39

Dallas (Love Field)

1 flight each way

$69

*Previously scheduled to operate during December 2020-peak travel period.

The number of seats, days, and markets for these fares are limited. 

Also on March 11, 2021, Southwest will begin previously announced daily service nonstop between Long Beach and Honolulu.

FLORIDA’S NEW FLIGHTS
Miami
Spring also will bring new ways to reach South Florida with additional nonstop service to Miami. Effective March 11, 2021, Southwest will offer twice daily nonstop service between Miami and Nashville for as low as $79 one-way** and twice daily service between Miami and Denver for as low as $89 one-way**.

**The number of seats, days, and markets for these fares are limited. See a full list of fares, fare rules, and terms and conditions below and at Southwest.com.

Sarasota/Bradenton
March will bring more nonstop routes allowing Customers to reach Sarasota/Bradenton, Florida. Effective March 13, 2021, Southwest will offer weekly service on Saturdays between:

Sarasota/Bradenton and Columbus, Ohio,
Sarasota/Bradenton and Indianapolis, &
Sarasota/Bradenton and Pittsburgh

NEW FLIGHTS TO INTERNATIONAL SITES
In April 2021, Southwest will add a third destination in Mexico nonstop from the carrier’s newest international gateway, Phoenix. Effective April 12, 2021, the carrier will offer once daily nonstop service between Phoenix and Cancun, joining Southwest’s existing service from Phoenix to both Cabo San Lucas and Puerto Vallarta.

Returning International Service
Southwest will resume daily nonstop service on March 11, 2021, between Houston (Hobby) and Cozumel, Mexico, and between both Houston (Hobby) and Chicago (Midway) and Montego BayJamaica, and weekly service on Saturdays between both ColumbusOhio and San Antonio and Cancun.

MOUNTAIN ESCAPES FOR WINTER AND SPRING
Customers looking to take advantage of a winter getaway will soon be able to visit two new seasonal winter destinations in Colorado. Beginning Dec. 19, 2020 and continuing through April 5, 2021, Southwest will offer up to three daily round trip flights between Denverand Steamboat Springs (Hayden), and between Denverand Montrose (Telluride). Additionally, the carrier will offer one round trip on Saturdays and Sundays between Dallas (Love Field) and both Montrose (Telluride) and Steamboat Springs (Hayden).

Southwest Airlines aircraft photo gallery:

Southwest Airlines aircraft slide show:

Southwest announces the schedules from Sarasota/Bradenton and Savannah/Hilton Head Island, details about the return of the 737 MAX

Southwest Airlines today published initial flight schedules to bring sun-seekers to two new coastal destinations in the Southeast: Sarasota/Bradenton service begins Feb. 14, 2021, and Savannah/Hilton Head service begins March 11, 2021. Southwest Airlines® will also fly nonstop between Long Beach, Calif., and Honolulu once daily beginning March 11, 2021, opening a fifth gateway in California for Southwest Customers moving between the mainland and the Hawaiian Islands. Also beginning that same day, March 11, 2021, the carrier will fly once daily between Orange County/Santa Ana (SNA) and both Puerto Vallarta, and Los Cabos in Mexico, resuming international service on Southwest from the LA Basin.

SARASOTA/BRADENTON SERVICE BEGINS FEB. 14, 2021

Southwest is in its 25th year of serving the Sunshine State. Sarasota/Bradenton will be the carrier’s 10th airport in Florida, initially serving Customers across the country through four nonstop routes: Baltimore/Washington, Chicago (Midway), Houston (Hobby), and Nashville, all starting Feb. 14, 2021.

Fly daily between

Sarasota/Bradenton and:

Initial service nonstop each day up to:

One-way fare as low as:

Baltimore/Washington

3 flights each way

$89

Chicago (Midway)

2 flights each way

$89

Houston (Hobby)

1 flight each way

$69

Nashville

2 flights each way

$69

SAVANNAH/HILTON HEAD SERVICE BEGINS MARCH 11, 2021

Southwest is adding more service in Georgia. Savannah/Hilton Head will link to the carrier’s growing network through five nonstop routes: Baltimore/Washington, Chicago (Midway), Dallas (Love Field), Houston (Hobby), and Nashville, all starting March 11, 2021.

Fly daily between

Savannah/Hilton Head and:

Initial service nonstop each day up to:

One-way fare as low as:

Baltimore/Washington

2 flights each way

$49

Chicago (Midway)

1 flight each way

$79

Dallas (Love Field)

1 flight each way

$79

Houston (Hobby)

1 flight each way

$79

Nashville

1 flight each way

$49

 

LONG BEACH TO BECOME SOUTHWEST AIRLINES GATEWAY TO HAWAII

Southwest Airlines will add Long Beach Airport to a list of California airports including Oakland, San Jose, Sacramento, and San Diego, in offering service nonstop to the Hawaiian Islands every day. Once daily service between Long Beach and Honolulu begins March 11, 2021, with one-way fares as low as $99. Seats, days, and markets are limited. Blackout dates apply.

ORANGE COUNTY TO LOS CABOS AND PUERTO VALLARTA DAILY, NONSTOP

Southwest Airlines will reinstate international service from Orange County/Santa Ana on March 11, 2021, with once daily service to both Los Cabos and Puerto Vallarta.

Southwest Airlines Boeing 737 MAX 8
(Ashlee D. Smith/Southwest Airlines)

In other news, the company has issued this statement concerning the Boeing 737 MAX:

Message from Gary Kelly, Chairman of the Board and Chief Executive Officer

After a thorough and comprehensive review of Boeing’s enhancements to the 737 MAX 8, the Federal Aviation Administration (FAA) has issued official requirements that enable airlines to return the MAX to service. Southwest is in receipt of the FAA’s directive regarding flight control software updates and additional Pilot training related to the MAX, and we are ready to meet each requirement. There is much work to be done before our MAX aircraft will resume service, which we estimate will likely take place no sooner than the second quarter of 2021. Today, I want to share a few of our thoughts and plans.

First and foremost, there is nothing more sacred to me than the Safety of our Customers and Employees. If we had a cause for doubt of the Safety of our fleet—or any subset of it—simply put, the planes would not fly. That is a moral obligation that I share with my fellow Southwest Family Members who work, fly, and travel with our own families on these aircraft. This is not only our profession, career, and livelihoods—it’s deeply personal to all of us.

Our Southwest Pilot Leadership Team has reviewed and expressed confidence in the MAX software and training updates following Boeing’s enhancements to the aircraft. I have personally been in contact with Boeing and the FAA regarding the changes and have been briefed by our internal experts. Additionally, aviation regulators from countries around the world have reviewed Boeing’s changes to the aircraft and the FAA’s new requirements.

Without getting too technical, we understand that Boeing has made changes to the flight control system that now compares input from two angle of attack sensors as opposed to one; the aircraft only responds if data from both sensors agree and only activates once per event; and Pilots always have the ability to override the aircraft’s input. These changes have been reviewed and approved by the FAA, and, with these enhancements, I am confident we will be ready to operate the MAX in accordance with the FAA’s requirements. I am going to be flying on the MAX before we return the aircraft to service—and the same is true for many other Southwest Leaders.

Before we return the aircraft to customer service, however, every active Southwest Pilot will complete additional FAA-required flight training in one of our nine 737 MAX simulators and will complete additional FAA-required computer-based training covering MAX procedures. Southwest will also require active Pilots to re-take our original 737 MAX 8 computer-based differences training as a refresher to complement the FAA-required training. Additionally, Southwest will conduct multiple readiness flights on each of our 34 MAX aircraft and complete thousands of hours of work, inspections, and the software updates before any of our Customers board a Southwest 737 MAX.

At Southwest, we only operate Boeing 737s, and our Pilots are highly trained and experienced at flying the aircraft. In fact, before the 737 MAX was grounded, Southwest Pilots flew almost 40,000 flights on the aircraft, which is more than 89,000 flight hours. Now, we’ll approach returning the MAX to service with the same commitment to training that we’ve employed for almost 50 years coupled with an uncompromising and unwavering commitment to Safety. For us, it’s a passionate pursuit, and it’s among the most important work of our careers. 

Thank you in advance for your patience and understanding throughout our upcoming return-to-service process for the 737 MAX. As always, we appreciate your support.

Video:

 

Southwest is coming to Sarasota-Bradenton, Florida

Southwest Airlines today announced plans to expand its Florida service by adding flights at Sarasota-Bradenton International Airport (SRQ) in first quarter of 2021.

Sarasota-Bradenton will be the carrier’s tenth airport served in the State of Florida and is the tenth airport in a list of new places to join the Southwest route map in the coming eight months as the carrier furthers its reach of friendly policies, iconic Hospitality, and value and comfort. Service details including the initial flight schedule and fares for SarasotaBradenton will be announced soon.

Previously announced Southwest service to Miami begins November 15.

Southwest Airlines announces initial schedules for Chicago O’Hare and Colorado Springs

Southwest Airlines today published its initial flight schedules for both Chicago O’Hare International and Colorado Springs Municipal airports.

Chicago (O’Hare) service begins February 14, 2021
More than 35 years after landing at Chicago Midway International Airport, Southwest will expand its footprint in the Chicagoland area, adding complementing service from Chicago O’Hare International Airport starting Feb. 14, 2021. The carrier’s initial service will offer 20 departures daily from O’Hare:

  • $39 one-way nonstop between Chicago (O’Hare) and Nashville (four times daily);
  • $79 one-way nonstop between Chicago (O’Hare) and Baltimore/Washington (four times daily);
  • $89 one-way nonstop between Chicago (O’Hare) and Denver (six times daily);
  • $99 one-way nonstop between Chicago (O’Hare) and Dallas (Love Field) (four times daily); and
  • $109 one-way nonstop between Chicago (O’Hare) and Phoenix (twice daily).

The number of seats, days of week, and markets for these fares are limited. 

During its more than three-decades of service to Chicago, Southwest has grown to become Chicago Midway’s largest airline while also employing more than 4,800 People in the city.

Colorado Springs service begins March 11, 2021
Southwest will also launch service from its fourth destination in Colorado when it takes off from Colorado Springs Municipal Airport on March 11, 2021. The new service links the Pikes Peak region nonstop with up to 13 flights a day to destinations across Southwest’s growing network.

  • $29 one-way nonstop between Colorado Springs and Denver (four times daily);
  • $59 one-way nonstop between Colorado Springs and Las Vegas (twice daily);
  • $59 one-way nonstop between Colorado Springs and Phoenix (twice daily);
  • $69 one-way nonstop between Colorado Springs and Dallas (Love Field) (three times daily); and
  • $89 one-way nonstop between Colorado Springs and Chicago (Midway) (twice daily).

Southwest to add three new destinations

Southwest Airlines continues its route map expansion plan due to its large number of grounded aircraft. Southwest plans to commence flights to Savannah-Hilton Head International Airport, Colorado Springs Municipal Airport and Jackson-Medgar Wiley Evers International Airport in Jackson, Mississippi.

Details, including routes and and schedules, will be announced later.

Southwest Airlines loses $1.2 billion in the third quarter

Southwest Airlines Company today reported its third quarter 2020 results:

  • Third quarter net loss of $1.2 billion, or $1.96 net loss per diluted share
  • Excluding special items1, net loss of $1.2 billion, or $1.99 net loss per diluted share
  • Third quarter operating revenues of $1.8 billion, down 68.2 percent year-over-year
  • Ended third quarter with liquidity of $15.6 billion, well in excess of debt outstanding

Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, “The pandemic persists along with the negative effects on air travel demand, resulting in our third quarter net loss of approximately $1.2 billion. We are encouraged by modest improvements in leisure passenger traffic trends since the slowdown in demand experienced in July. However, until we have widely-available vaccines and achieve herd immunity, we expect passenger traffic and booking trends to remain fragile. In response, we will continue to monitor demand and prudently adjust our available seat miles (ASMs, or capacity), while pursuing further revenue and cost opportunities. I am grateful to our People for maintaining a safe and reliable operation with industry-leading Customer Service2, which generated the best Net Promoter Score in our history3 in third quarter.

“Our top priority remains, and always will be, the safety of our Employees and Customers. We are dedicated to the Southwest Promise, first launched in May in response to the COVID-19 pandemic. The Southwest Promise encompasses our multi-layered approach to supporting the well-being of our Employees and Customers: additional cleaning throughout the Customer journey; procedures to support distancing at the airport and onboard aircraft; a requirement that Passengers and Customer-facing Employees wear face masks or face coverings; a sophisticated air distribution system that results in an exchange of cabin air every two to three minutes; and HEPA filters that remove 99.97% of airborne particles4, similar to technology found in hospitals. We are one of just a few airlines in the world that limits the number of seats available for sale to promote distancing onboard our aircraft, and we will continue to do so through November. This practice of effectively keeping middle seats open bridged us from the early days of the pandemic, when we had little knowledge about the behavior of the virus, to now. Today, aligned with science-based findings from trusted medical and aviation organizations, we will resume selling all available seats for travel beginning December 1, 2020. We are pairing this change with enhanced flexibility for Customers on fuller flights to rebook to another flight, if desired. We are working with UT Southwestern Medical Center and the Stanford University School of Medicine, and we will have access to an advisory council comprised of physician-scientists with knowledge and expertise in infectious diseases, prevention and testing protocols, and the latest medical research about COVID-19. Both of these trusted medical organizations serve as resources to provide insights that will help us evolve our policies as we continue to deliver on the Southwest Promise. According to research put forth within the last two weeks by several reputable institutions, all arriving at the same conclusion—the risk of breathing COVID-19 particles on an airplane is virtually non-existent, with the combination of air filtration and face covering requirements. The combined studies, research, and counsel we have received, thus far, give us confidence in our approach and timing of this change to the Southwest Promise.

“We are committed to taking care of our Employees and Customers while protecting the financial health of our Company through the most challenging time in our nearly 50-year history. As a result of our preparedness and swift actions taken in response to the pandemic, our liquidity remains strong, and we remain the only U.S. airline with an investment-grade credit rating by all three rating agencies. As of September 30, 2020, our total liquidity was $15.6 billion, consisting of cash and short-term investments of $14.6 billion and a fully available secured revolving credit facility of $1 billion. We have unencumbered assets worth approximately $12 billion, including $10 billion in aircraft and $2 billion in non-aircraft assets such as spare engines, ground equipment, and real estate. In addition, we have significant value from our Rapid Rewards® loyalty program.

“We remain diligent in managing our cash burn. Since March, we have reduced annual 2020 cash outlays and spending by approximately $8 billion compared with original plans. Average core cash burn5 was approximately $12 million per day6 in September and $16 million per day in third quarter 2020, a sequential improvement from average core cash burn of approximately $23 million per day in second quarter 2020, primarily due to improving revenue trends. Our average core cash burn in October is currently estimated to be approximately $12 million per day, and fourth quarter 2020 is currently estimated to be approximately $11 million per day, driven primarily by continued modest improvements in close-in leisure demand and booking trends, as well as cost savings from voluntary Employee separation and leave programs. While we continue to make progress on reducing cash burn, in order to achieve cash burn break even, we estimate operating revenues will need to recover to an estimated 60 to 70 percent of 2019 levels, which is roughly double our third quarter 2020 levels.

“We are grateful for the Payroll Support Program (PSP) proceeds we received from the U.S. Treasury under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which allowed us to operate without pay cuts, layoffs, or furloughs through September 30, 2020. As the pandemic and its devastating effects on our industry continue, we urge our federal leaders to pass an economic relief package that includes a clean, six-month extension of the PSP to further protect jobs and crucial air travel to communities across the Nation. Absent this extension, we simply cannot afford to continue with the conditions required to maintain full pay and employment. Based on the lack of stimulus, we have communicated temporary pay rate reductions to our non-contract Employees and have begun negotiations with our Union Leaders to reach agreement on reasonable, temporary concessions for our union contract Employees beginning January 1, 2021, in return for no layoffs or furloughs through the end of 2021, barring unforeseen and catastrophic changes to our business. In the event that we are unable to reach agreement on temporary concessions with our Unions, we plan to—as a last resort—furlough Employees in early 2021. If the federal government extends the much-needed PSP for the airline industry, we intend to discontinue or reverse these efforts through 2021.

“We are pursuing additional revenue opportunities that utilize idle aircraft and Employees to provide our legendary Customer Service to new, popular destinations. We recently published new service that we expect to commence on November 15, 2020, to both Miami International Airport and Palm Springs International Airport, as well as new seasonal service that we expect to commence on December 19, 2020, to both Montrose Regional Airport (Telluride and Crested Butte) and Yampa Valley Regional Airport (Steamboat Springs). We also recently announced our intention to add service in first half 2021 to Chicago O’Hare International Airport, and return to Houston’s George Bush Intercontinental Airport, complementing existing service at Chicago Midway and Houston Hobby airports, and reinforcing a long-standing commitment by Southwest to both metropolitan areas. Today we announce our intention to add service in first half 2021 to Colorado Springs Municipal Airport, Savannah/Hilton Head International Airport in Georgia, and a return to Jackson-Medgar Wiley Evers International Airport in Mississippi. We are leveraging additional airports in cornerstone cities where our Customer base is large, along with adding easier access to popular leisure-oriented destinations from across our domestic-focused network. We entered this crisis with the U.S.airline industry’s strongest balance sheet and most successful business model. These additional service points on our map are low-risk opportunities we can provide Customers now, all the while better positioning Southwest as travel demand rebounds.”

Revenue Results and Outlook

The Company’s third quarter 2020 operating revenues decreased 68.2 percent, year-over-year, to $1.8 billion, as a result of continued negative impacts to passenger demand and bookings due to the pandemic. Third quarter 2020 operating revenue per ASM (RASM, or unit revenues) was 6.78 cents, a decrease of 52.7 percent, driven by a load factor decrease of 38.6 points and a passenger revenue yield decrease of 23.1 percent, all year-over-year.

Following the modest improvements in passenger demand and bookings in May and June 2020, the Company experienced a stall in improving revenue trends in July 2020, due to the rise in COVID-19 cases. In August and September 2020, the Company again experienced modest improvements in close-in leisure passenger demand and bookings. The following monthly table presents selected revenue and load factor results for third quarter 2020:

July 2020

August 2020

September 2020

Operating revenue year-over-year

Down 70.6%

Down 68.5%

Down 64.8%

Previous estimation

Down 70% to 75%

Down 70%

Down 65% to 70%

Load factor

42.6%

42.2%

51.5%

Previous estimation

Approximately 43%

Approximately 42%

45% to 50%

Thus far, the Company continues to experience modest improvements in close-in leisure passenger demand in October and bookings for November. The following monthly table presents selected preliminary estimates of revenue and load factor for October and November:

October 2020

November 2020

Operating revenue year-over-year

Down 65% to 70%

Down 60% to 65%

Previous estimation

Down 65% to 75%

(a)

Load factor

50% to 55%

50% to 55%

Previous estimation

45% to 55%

(a)

(a) No previous estimation provided.

The Company has continued to make progress on its global distribution system (GDS) initiative, now at industry-standard participation, including Airline Reporting Corporation (ARC) ticketing and settlement with Amadeus, in addition to its second quarter 2020 launch with Travelport’s GDS platforms: Apollo, Worldspan, and Galileo. The Company’s enhancement of its GDS channel strategy complements its expansion of direct connect via Airline Tariff Publishing Company’s (ATPCO) New Distribution Capability (NDC) Exchange and existing SWABIZ® options, with the goal of distributing its everyday low fares to more business travelers through their preferred channel.

Cost Performance and Outlook

Third quarter 2020 total operating expenses decreased 33.5 percent, year-over-year, to $3.2 billion. Excluding special items, third quarter 2020 operating expenses decreased 30.1 percent, year-over-year, to $3.4 billion. Total operating expenses per ASM (CASM, or unit costs) decreased 1.1 percent, compared with third quarter 2019. Excluding special items, third quarter 2020 CASM increased 4.1 percent, year-over-year.

Third quarter 2020 economic fuel costs1 were $1.23 per gallon and included $24 million, or $.08 per gallon, in premium expense, compared with $2.07 per gallon in third quarter 2019, which included $20 million, or $.04 per gallon, in premium expense, with no cash settlements from fuel derivative contracts in either period. Market fuel prices have increased since the dramatic decrease that occurred at the end of first quarter 2020, but are still favorable compared with last year, and the Company’s third quarter 2020 fuel and oil expense was approximately $257 million lower than its original third quarter 2020 fuel projection in January 2020. The Company continued to operate fewer of its oldest, least fuel-efficient Boeing 737-700 aircraft as a result of capacity reductions due to the pandemic, which, combined with lower load factors, resulted in a year-over-year improvement of 10 percent in ASMs per gallon (fuel efficiency) in third quarter 2020. The Company currently estimates a fourth quarter 2020 year-over-year fuel efficiency improvement similar to the year-over-year improvement experienced in third quarter 2020, driven by the continued operation of fewer of its 737-700 aircraft as a result of capacity reductions due to the pandemic.

Based on the Company’s existing fuel derivative contracts and market prices as of October 15, 2020, fourth quarter 2020 economic fuel costs are estimated to be in the range of $1.20 to $1.30 per gallon7, including $24 million, or $.09 per gallon, in premium expense, compared with $2.09 per gallon in fourth quarter 2019, which included $20 million, or $.04 per gallon, in premium expense, with no cash settlements from fuel derivative contracts in either period. As of October 15, 2020, the fair market value of the Company’s fuel derivative contracts for the remainder of 2020 was immaterial, and the fair market value of the fuel hedge portfolio settling in 2021 and beyond was an asset of approximately $107 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding fuel and oil expense, third quarter 2020 operating expenses decreased 24.3 percent, compared with third quarter 2019. The Company’s third quarter 2020 results included a special item, a benefit, of $1.2 billion for the PSP proceeds recognized during the quarter. The Company’s third quarter 2020 results also included a special item, a charge, of $1.1 billion related to the costs for Employees who accepted the Company’s offer to participate in its voluntary separation and extended emergency time off programs. The Company accrued a charge of $485 millionduring third quarter 2020 for its voluntary separation program. Including the $307 million charge accrued in second quarter 2020, the total accrual for the Company’s voluntary separation program was $792 million. The Company also accrued a charge associated with its voluntary extended emergency time off program of $613 million in third quarter 2020. Approximately 15,200 Employees, or 25 percent of the Company’s workforce, are participating in one of these voluntary programs: approximately 4,200 elected the voluntary separation program, and approximately 11,000 are participating in the voluntary extended emergency time off program. If all voluntary program requests are granted, the total potential voluntary program costs could be up to approximately $1.7 billion; however, the Company did not accrue approximately $300 million of estimated voluntary program costs for extended emergency time off requests beyond February 2022, or approximately 18 months, based on the uncertainty of its future capacity levels and required staffing. Of the total voluntary program costs accrued of approximately $1.4 billion, the Company made cash payments to Employees of approximately $195 million during third quarter 2020, resulting in remaining accrued program costs of approximately $1.2 billion as of September 30, 2020. The Company expects to incur approximately $300 million in voluntary program cash payments in fourth quarter 2020, approximately $500 millionin 2021, and up to approximately $700 million in 2022 and beyond, if no Employees are recalled prior to the end of their election period. As a result of these voluntary programs, the Company’s salaries, wages, and benefits costs were lowered by $143 million in third quarter 2020. In addition, the Company expects the cost savings from these programs to be approximately $400 million in fourth quarter 2020 and approximately $1.1 billion in 2021, with voluntary separation program run-rate cost savings of approximately $500 million in 2022 and beyond. If there are no Employees recalled early from the extended emergency time off program, the net present value of the program through 2025 exceeds $2 billion. These voluntary programs allow the Company to significantly reduce its labor costs and cash burn immediately, while preserving jobs and maintaining the flexibility to more quickly adjust to a recovery in travel demand.

Excluding fuel and oil expense and special items, third quarter 2020 operating expenses decreased 20.3 percent, compared with third quarter 2019. No profitsharing expense was accrued in third quarter 2020 due to the Company’s net loss, compared with a profitsharing accrual of $144 million in third quarter 2019. Excluding fuel and oil expense, special items, and prior year profitsharing expense, third quarter 2020 operating expenses decreased 17.1 percent year-over-year. The significant year-over-year decrease was driven primarily by the decrease in variable, flight-driven expenses, such as salaries, wages, and benefits; maintenance expense; and landing fees; combined with the Company’s continued focus on eliminating discretionary spending and managing cash burn. On a unit basis, third quarter 2020 operating expenses, excluding fuel and oil expense, special items, and profitsharing expense, increased 23.4 percent, year-over-year, driven primarily by the significant reduction in capacity.

Excluding fuel and oil expense, special items, and prior year profitsharing expense, fourth quarter 2020 operating expenses are expected to decrease in the range of 20 to 25 percent, year-over-year, representing a sequential improvement compared with the Company’s third quarter 2020 operating expenses year-over-year decrease in operating expenses, primarily due to lower capacity and higher cost savings driven by its voluntary separation and extended leave programs8. The Company remains intensely focused on managing its operating costs while maintaining flexibility with its staffing and capacity plans.

Other expenses in third quarter 2020 increased by $131 million, year-over-year, primarily due to an increase in interest expense driven by new debt issued during 2020; lower interest income as a result of lower interest rates; and an increase in other losses driven by adjustments for fuel derivative contracts not designated as fuel hedges, which are excluded from the Company’s non-GAAP results as a special item.

The Company’s third quarter 2020 effective tax rate was 25.0 percent, and the Company currently estimates its annual 2020 effective tax rate to be in the range of 24 to 26 percent.

Liquidity and Capital Deployment

As of September 30, 2020, the Company had approximately $14.6 billion in cash and short-term investments, and a fully available revolving credit facility of $1.0 billion. Since the beginning of 2020, the Company has raised cash of approximately $18.9 billion, net, including $13.4 billion in debt issuances and sale-leaseback transactions, $2.2 billion through a common stock offering, and $3.4 billion of PSP proceeds. Since the Company’s previous update of cash and short-term investments of approximately $14.8 billion as of September 15, 2020, the Company raised $121 million through an aircraft-secured financing and received additional PSP proceeds of $94 million, representing the Company’s final allocation from the program, for which the Company provided the U.S. Treasury consideration in the form of a $28 million increase in the promissory note issued in second quarter 2020, and an additional warrant to purchase up to 78 thousand shares of the Company’s common stock. The original terms for both the promissory note and the warrant issued in second quarter 2020 applied for this additional consideration provided. In total, the Company has now received $3.4 billion of PSP proceeds, and has provided the U.S. Treasury consideration in the form of a promissory note in the aggregate amount of $976 million and warrants to purchase up to an aggregate of 2.7 million shares of the Company’s common stock.

Net cash used in operations during third quarter 2020 was $1.1 billion, driven primarily by the Company’s net loss. Capital expenditures during third quarter 2020 were $89 million. The Company has more than offset its originally planned annual 2020 capital spending of approximately $1.4 billion to $1.5 billion, primarily due to its fleet delivery expectations with Boeing discussed below, $815 million of proceeds from sale-leaseback transactions, $428 millionin supplier proceeds, and the cancellation or deferral of the majority of its capital investment projects originally planned for this year.

As of September 30, 2020, the Company had current and noncurrent debt obligations that totaled $10.9 billion. The Company repaid approximately $59 million in debt and finance lease obligations during third quarter 2020, and expects to repay approximately $543 million in debt and finance lease obligations in fourth quarter 2020, including a $500 million bullet maturity payment made in early October. Based on current debt outstanding and current market interest rates, the Company expects fourth quarter 2020 interest expense to be approximately $113 million. The Company expects to repay approximately $220 million of debt and finance lease obligations in 2021. As of September 30, 2020, the Company was in a net cash position9 of $3.7 billion, and its adjusted debt10 to invested capital (leverage) was 54 percent.

Fleet and Capacity

The Company returned two leased 737-700 aircraft and retired one owned 737-700 aircraft during third quarter 2020, ending the quarter with 734 aircraft in its fleet. The Company expects to return three leased 737-700 aircraft during fourth quarter 2020. The Company has not received any 737 MAX aircraft deliveries from Boeing since February 2019. As previously disclosed, the Company has an agreement with Boeing to take no more than 48 MAX aircraft through December 31, 2021. The timeline and quantity of deliveries through 2021 is not yet finalized. However, the Company is currently in discussions with Boeing to restructure its order book, and continues to evaluate its fleet needs in light of current demand trends. Beyond 2021, the Company currently has 217 firm orders and 115 options for MAX aircraft in its order book. Additional information regarding the Company’s contractual aircraft delivery schedule is available in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020.

In response to capacity reductions due to the effects of the pandemic, the Company is currently managing, on average, 150 to 250 aircraft in storage or short-term parking. The Company currently has approximately 100 aircraft in long-term storage, including 34 MAX aircraft that were grounded as of March 13, 2019, to comply with the Federal Aviation Administration (FAA) emergency order issued for all U.S. airlines to ground all MAX aircraft, and is managing the remaining 50 to 150 aircraft in short-term parking to provide greater flexibility to adapt to the seasonal demand patterns of the fourth quarter with additional aircraft in service. The Company continues to manage its active fleet based on passenger demand trends and has flexibility to adjust, as needed.

The Company continues to closely monitor the remaining milestones to be completed by Boeing and the FAA in order for the MAX to return to service. Regulatory approval of MAX return to service is subject to Boeing’s ongoing work with the FAA, who will determine the timing of MAX return to service. Upon a rescission of the FAA order to ground the MAX fleet, the Company will work closely with Boeing and the FAA to safely reintroduce the 34 MAX aircraft currently in its fleet into service and estimates it will take the Company several months to comply with applicable FAA requirements, including all necessary Pilot simulator training. The MAX will likely remain out of the Company’s published flight schedules until at least second quarter 2021. The Company offers no assurances that current estimations and timelines are correct. Any changes to current estimations could result in further delays in MAX aircraft deliveries, additional flight schedule adjustments and reductions beyond 2020, and additional financial damages.

The Company’s third quarter 2020 capacity decreased 32.8 percent, year-over-year, due to capacity reductions in light of the significant decrease in passenger demand and bookings as a result of the pandemic. The Company currently estimates October 2020 capacity to decrease approximately 45 percent, and November 2020 capacity to decrease approximately 35 percent, both year-over-year, compared with its previous estimation of October 2020 capacity to decrease in the range of 40 to 45 percent, and November 2020 capacity to decrease in the range of 35 to 40 percent, both year-over-year. The Company recently adjusted its December 2020 published flight schedule, and currently estimates its December 2020 capacity to decrease in the range of 40 to 45 percent, year-over-year. The Company estimates its fourth quarter 2020 capacity to decrease approximately 40 percent, year-over-year.

Passenger demand and booking trends remain primarily leisure-oriented and inconsistent by region. The Company remains cautious in this uncertain demand environment and continues to plan for multiple scenarios for its fleet and capacity plans. The Company will continue to monitor demand and booking trends and adjust capacity, as deemed necessary, on an ongoing basis. As such, the Company’s actual flown capacity may differ materially from currently published flight schedules or current estimations.

Southwest Airlines aircraft photo gallery: