Southwest Cuts November Schedule Despite ‘Modest’ Uptick In Bookings

Southwest Airlines is taking an axe to its November schedule, despite observing moderately improved demand trends in recent weeks. 

Dallas-based Southwest on Sept. 17 reported “modest improvement” in close-in leisure bookings during the month of August, following a bruising July that saw demand growth stall over a surge in COVID-19 cases across the U.S. The positive trends experienced in August have continued into September, and close-in bookings for the rest of the month and October remain strong. 

Still, despite the improvement, Southwest estimated capacity will be down 40% and 40-45% year-over-year (YOY) in September and October, respectively, marking a substantial cut from being down 27% in August. The carrier is in the process of reducing its November schedule from previously planned levels, and now estimates capacity for the month to decrease 30-35% from a year ago.

Despite the deceleration from August, Southwest still plans to fly a substantially larger chunk of its overall schedule than other major U.S. carriers. For example, while Southwest’s system capacity is expected to be 40% lower YOY in September, American Airlines, Delta Air Lines and United Airlines anticipate theirs to be down 61%, 57% and 67%, respectively, according to a recent report from Raymond James. 

Southwest expects operating revenues to be down in a range of 65-70% in both September and October, slightly improved from being down 70% in August. Load factors are expected to gradually increase to a range of 45-50% in September and 45-55% in October, slightly better than August’s 42% result.

Thanks to better-than-expected demand, Southwest reduced its estimated daily cash burn for the 2020 third quarter to $17 million per day, from $20 million previously. The company said it raised approximately $18.7 billion since the beginning of 2020, including $3.3 billion in federal payroll support, leaving it with an estimated $14.8 billion in liquidity as of Sept. 15.

Southwest separately announced it will continue leaving middle seats open on all flights through Nov. 30, in a bid to offer enhanced social distancing for passengers through the Thanksgiving holiday in the U.S. Because the airline does not assign seats, its commitment involves capping load factors at roughly two-thirds across its fleet of Boeing 737s, rather than physically blocking off middle seats.