Southwest Airlines has stockpiled cash to get through 24 months of pandemic-depressed flying levels, but even a recent uptick in passengers isn't enough to offset a 65% to 70% drop in revenue in July.
In a regulatory filing Wednesday, the Dallas-based airline said it expects to burn only $20 million to $25 million during the second quarter. The cash burn, lower than previous estimates, has been helped by passengers slowly coming back and efforts to reduce spending, the company said.
But on average, Southwest planes are less than half full and the carrier is nowhere near being profitable again.
"The company continues to experience significant negative impacts to passenger demand and bookings in second quarter 2020 due to the novel coronavirus COVID-19 pandemic," Southwest said in the filing.
Southwest has been the best positioned financially of major airlines, with less debt and more reliance on domestic flying than its rivals. But the airline has still had to dig deep to ensure it has enough available to make it through the steepest drop in flying in commercial aviation history.
Since the beginning of June, Southwest has gone to lenders for another $1.8 billion.
CEO Gary Kelly has said the company is preparing for flying to be down 30% year over year in the fall and will need to reduce staffing levels by a similar amount.
Even that level of flying comes with major sacrifices. Southwest is among airlines pledging to reduce the number of seats sold on planes to enable social distancing. On Tuesday, Southwest said it would only sell planes up to two-thirds capacity through September.
Airlines also have mandated face masks and coverings for customers and this week committed to step up enforcement on passengers who refuse to wear them.
Southwest has added Plexiglass barriers, changed boarding procedures and wants customers to agree to a "health declaration" to make sure they are not showing signs of COVID-19 before getting on planes. All are steps to convince customers that flying doesn't put them at an increased risk of getting the virus.
The company published its flying schedule through Jan. 4, with a plan that's often more aggressive than its competitors as it aims to pick up customers from airlines that are being more cautious. Southwest's November and December schedules have almost as many flights as in 2019.
Southwest has about $13.9 billion in cash and liquidity on hand, enough to carry it through the next two years if flying levels stay the same.
For now, the company is also relying on $3.2 billion in government grants and loans to cover payrolls. Southwest is in the midst of offering voluntary buyouts and leave to employees, hoping to stave off furloughs this fall.
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