A jet from Southwest Airlines.
Scott Olson | Getty Images News | Getty Images
Southwest Airlines reported Wednesday “modest” improvements in passenger demand this month as holidaymakers turned last-minute travel bends despite the coronavirus pandemic.
The company is also making a government loan of $ 2.8 billion, saying it can get financing elsewhere. Southwest and other airlines reached agreements last month to share the $ 25 billion in loans to troubled U.S. airlines in the CARES Act in March. Southwest provided $ 15.4 billion – $ 13.2 billion in debt and $ 2.2 billion in a share sale – and received $ 3.3 billion in government tax support.
The Dallas-based carrier expects its August 2019 revenue to fall by 70% to 75%, a slight improvement from its previous sales forecast to 80% from last year. It said planes will fly 40% to 45% this month, better than the 30% to 40% it previously expected.
Cash burn for the third quarter is likely to improve slightly to $ 20 million per day, up from a forecast of $ 23 million
Shares were up 2.3% in premium trading.
Still, booking trends are “inconsistent”, Southwest warned. After demand increased in May and June, improvements in bookings continued along with the increase in coronavirus cases around the US, it said.
Bookings were up slightly for September, a positive sign for the carrier, which, like all airlines, is preparing for the traditional delay to the summer on top of the devastating impact of the pandemic on demand. However, the airline is preparing for deeper cuts on its schedule.
It said its capacity in September will be about 40% less than last year, down from an earlier estimate for a drop of no more than 25% year-on-year. For the third quarter, it now expects capacity to fall by 30% to 35%, worse than the 20% to 30% previously forecast by Southwest. Southwest said it estimates October capacity will be at about 40% to 50% from last year.
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