Southwest reports bookings are improving
Southwest, Delta and United Airlines all said Tuesday they are pulling back on the deep cuts in their current schedules because of improved bookings.
The picture at Southwest still isn’t rosy. It said it expects its revenue to drop to between 85% to 90% in May compared to a year ago. The airline predicts it will sell only 25% to 30% of seats on its greatly reduced schedule of flights this month.
As bad as that is, it’s an improvement from its earlier forecast of a 90% to 95% drop in revenue, when Southwest expected to sell just 5% to 10% of its flights. And the carrier expects June revenue to be down 80% to 85%, selling about 30% to 45% of seats. It cautioned that the environment remains uncertain.
Delta also reported that its bookings have improved, with new ones outpacing passenger cancellations on “some days” so far in May, said CFO Paul Jacobson in an presentation to investors Tuesday.
“We have seen a little bit of a bounce off the bottom. My caution is not to draw too many conclusions. But there are reasons to be encouraged,” he said. Delta is being careful to make sure the improved bookings turn into actual tickets, he added, and that they are not canceled as passengers’ dates of travel gets closer.
Delta has added about 100 flights a day to its schedule through June, Jacobson said. That allows Delta to leave 50% of first class seats and 40% of economy seats open on flights, to allow for social distancing between passengers.
Although the overall percentage of seats filled is only a faction of those limits, the higher demand on some routes requires more flights to avoid going those caps, he said.
“Credibility matters. We’ve got to keep those promises [on social distancing],” Jacobson said. “People have to get comfortable. What we’re trying to do is remove as much uncertainty as we can. All of this is to raise the [passengers’] level of confidence.”
Still, United warned that it “plans to continue to proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand.”
A slow return
US airlines reported losses of more than $2 billion in the first three months of the year, and that occurred even though the industry didn’t see the fall off in traffic until early March. Much larger losses are forecast for the second quarter.
But as more of the nation reopens for business, the number of passengers passing through TSA checkpoints at US airports is also showing signs of improvements. The traffic Monday at 9.3% of the traffic during the third Monday of May last year. That’s far better than the low point of 3.6% of year-earlier traffic through the checkpoints on April 16.