Southwest Airlines Co. expects depressed travel amid the nationwide surge in coronavirus cases and typically weak seasonal demand to combine for a difficult start to 2021 for the industry.
“January and February are bound to be really rough months — winter time, high case loads — and they are seasonally soft anyway,” Chief Executive Officer Gary Kelly said Thursday in an interview with the Wings Club of New York. “We can get started on the vaccine process and get started on recovery, but we’ve got a long way to go.”
Kelly’s grim outlook added to recent warnings from other airlines that a bookings slowdown that started before Thanksgiving has persisted this month. The industry has struggled to stimulate demand that’s been pummeled by the pandemic. Domestic travel remains only about one-third of last year’s levels, and international demand has lingered at about 15% amid quarantines and travel restrictions.
While Kelly expects Southwest to lose less money in the fourth quarter than its $1.2 billion deficit in the third, “the revenue environment is still depressed.”
Delta Air Lines Inc. warned last week that it will burn more cash this quarter than initial projections because of the weaker bookings, while American Airlines Group Inc. said its cash consumption would be at the high end of its forecast.
This week, carriers also dropped fees to change tickets for many overseas trips to lure passengers back on planes, and Delta urged workers to consider extending voluntary unpaid leaves into 2021.
“You have to be grounded in the reality that this is really difficult, it’s not a quick fix,” Kelly said. “No one knows exactly how this will play out and when.”
Southwest will add more cities to its network beyond the 10 it had already announced for this year and next, Kelly said. By using idled workers and planes parked during low demand, the airline can enter the destinations at relatively low cost, he said.
