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Southwest Forecasts a Rise in Bookings 1 Year After Pandemic’s Start

Madhu Unnikrishnan

February 16th, 2021

Southwest Airlines is revising its quarterly guidance as passenger demand continues to improve beyond expectations, the company said in an investor update filed with the U.S. Securities and Exchange Commission (SEC).

Although January and February demand was in line with the company’s expectations, bookings for March are stronger than expected. Leisure demand is expected to strengthen through March, but it will still be off 2019 levels. Business travel demand remains depressed, Southwest said.

But despite the somewhat encouraging data Southwest reported, the comparisons with 2019 are sobering. The Dallas-based carrier said January revenues were down 65 percent from 2019 and 66 percent from 2020 (which was before the coronavirus began spreading in the U.S.). Capacity was down 40 percent in January from 2020 and 42 percent from 2019.

This tracks with data from the U.S. Bureau of Transportation Statistics (BTS), which show that passenger traffic in the U.S. was down 62 percent in December compared with the same month in 2019. Domestic traffic — a more germane statistic, given Southwest’s largely domestic network — was off 61 percent from 2019, BTS data show.

Southwest expects first quarter capacity to be 35 percent lower than 2020 and 38 percent off 2019.

Further sign of Southwest’s slightly brighter future is its daily cash burn numbers. For January, the carrier spent $15 million per day. It expects daily cash burn for the first quarter to hold at $15 million, down from previous guidance of $17 million per day. The carrier is expecting to take, in total, $864 million in federal payroll support in the first quarter from the stimulus bill approved in December.

Southwest expects to have its fleet of Boeing 737 Max aircraft in revenue service on March 11, after completing training and software updates. The carrier is the largest operator of the type and last year warned that it would require more time than its competitors, United Airlines and American Airlines, to train all its pilots to operate the aircraft. Alaska Airlines took delivery of its first Max last month and expects to put it into revenue service in March. The Federal Aviation Administration lifted its grounding of the type in November.

Madhu Unnikrishnan

February 16th, 2021

 Tomás Del Coro

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