Skift Take
Why does CEO Gary Kelly say he's "happy"? The airline is aggressively going after leisure travelers and has added a bunch of new routes. Still, it's not all clear skies ahead for the LUV line, as potentially fractious union negotiations loom.
Southwest Arlines famously used to boast of its dozens of consecutive quarters of profits, even during past crises when its rivals bled red ink. And then a pandemic arrived and the world changed. The Dallas-based carrier reported its largest-ever quarterly loss on Thursday, of $1.2 billion.
Despite this, CEO Gary Kelly is optimistic about Southwest's future. Revenues were down 68 percent in the second quarter, but that's an improvement over the 83 percent decline the airline reported in July. Demand grew over the summer as people became more comfortable traveling. And underscoring that last point, more passengers are booking tickets further out from the day of travel. Especially as the Thanksgiving and Christmas holidays approach, more passengers are buying tickets more than 21 days out. "I'm happy that we're uniquely prepared for this environment with our business model," Kelly said. "We have low costs, low fares, no hidden fees, and nothing to hide."
That business model may be a key reason why Southwest isn't faring as poorly as many of its rivals. Carriers like Delta Air Lines, United Airlines, and American Airlines have watched their lucrative international networks basically idled as demand for overseas travel has collapsed and countries around the world have imposed strict quarantine rules. Southwest's network is 97 percent domestic, which has bounced back more quickly. And the international flights Southwest operates are to beach destinations in Mexico and the Caribbean.
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And this is another key to Southwest's success, Kelly said. Leisure travel is coming back faster than business travel. It has a big presence in leisure markets, like Florida and California, that are recovering more quickly.
