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PHXWRLD
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Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 3:26 pm

Southwest has been an industry leader in profit since its founding about 50 years ago. They have never had an unprofitable year. Will that finally change in 2020? Also wondering how they managed to stay profitable for so long in such a volatile industry.
 
F9Animal
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 3:34 pm

Probably? I mean, I don't think any airline will be profitable through this crisis. I am sure asterisks will be placed on the financials of all airlines during this time period.

I do firmly believe Southwest will be one of the first airlines to show a profit when airlines get back in full swing though. Maybe we can start some wagers?
I Am A Different Animal!!
 
questions
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 3:38 pm

Their business model and fuel hedges saved them in the past.

However, WN is a very different airline today. Importantly, the management team and culture have not evolved and therefore will be more challenged than others in weathering the economic and financial crisis.

WN likes to boast about its history of no bankruptcy and no layoffs. I doubt they will continue to brag in the future. (No. I’m not predicting bankruptcy.)
 
MIflyer12
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 3:46 pm

Yes, this will be the year. Take Southwest's 2019 income statement, cut top-line revenue by 50/60/70 or 80%, cascade the operational cost cuts and lower fuel prices through, and show us how they make money. IMHO you can't. U.S. airlines have way too much in fixed expenses (including union labor agreements) to adjust to this scale of revenue decline so quickly.

http://investors.southwest.com/news-and ... -112908345
 
EWRandMDW
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 4:10 pm

Are you hoping that their profitability streak is broken? I hope that somehow they do make a profit, even if it's a fraction of $1.00, just because!
 
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usdcaguy
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 4:25 pm

Their bragging rights will come from not losing as much as other carriers.
 
dbo861
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 4:45 pm

Does WN still hedge fuel? If so, this last few weeks would have been the best time to do it if they were in a position to do so.
 
nclarks
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 4:47 pm

I truly hope we still make a profit. Excited for an airline to post a loss is sad.
 
CRJ5000
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 4:51 pm

No way they make a profit this year. Sad as they were a great success story of US aviation.
Hopefully they are right back to profitability in 2021, but it's going to be a big hill to climb.
 
mga707
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:03 pm

[photoid][/photoid]
PHXWRLD wrote:
Southwest has been an industry leader in profit since its founding about 50 years ago. They have never had an unprofitable year. Will that finally change in 2020? Also wondering how they managed to stay profitable for so long in such a volatile industry.


'Never' is incorrect. They did not show a profit the first two years of their operations, 1971 and 1972. Have turned a profit from 1973 on.
 
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aemoreira1981
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:07 pm

Southwest has lost money before...but the last time it lost money was 1972. As for 2020, all performance stats from this year for businesses that survive can be basically disregarded for what's essentially domestically an "act of God" (something for which no one in the USA can be held responsible).
 
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airportugal310
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:08 pm

Why is that two posters (so far...) automatically assume that by OP posing a simple question that there's an inherit "joy" in asking it? So weird...
Last edited by airportugal310 on Thu Apr 09, 2020 5:09 pm, edited 1 time in total.
“They bought their tickets, they knew what they were getting into. I say, let 'em crash.”
 
mga707
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:09 pm

aemoreira1981 wrote:
Southwest has lost money before...but the last time it lost money was 1972. As for 2020, all performance stats from this year for businesses that survive can be basically disregarded for what's essentially domestically an "act of God" (something for which no one in the USA can be held responsible).


Glad we agree...
 
CRJ5000
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:10 pm

airportugal310 wrote:
Why is that two posters (so far...) automatically assume that by OP posing a simple question that there's an inherit "joy" in asking it? So weird...


I thought the same. Didn't seem like OP was getting any joy from WN potentially losing money. It was just a question.
 
AA747123
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:26 pm

I am sure WN will remain profitable through this crisis. In their entire history they have never lost a penny, they will get through this, and with no layoffs
 
AMALH747430
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:33 pm

I don't think that the OP was wising ill will on WN or it's employees. I certainly hope that all players can return to profitability as quickly as possible.

It is going to be interesting to watch how WN weathers this. In the post 9/11 environment the demand slump was based on fear of flying (for a short time following the attacks) and a slump in demand. WN was able to lower fares to "put some [rear ends] in the seats" (as Colleen Barrett was quoted saying) because they had an extremely profitable fuel hedging operation that buoyed their unprofitable airline operation. WN at the time was also still a true LCC. They were still growing and hiring new employees, keeping their workforce relatively "new" and thus, cheaper. They swooped into PIT after US retreated there, STL after AA pulled back, etc... The legacies were on their heels at the time and the ULCC's were still a few years away. Other than B6, FL, and HP (this is a stretch as they were still very much concentrated in PHX and LAS) there really wasn't any national LCC competition.

Fast forward to 2020 and WN is now very much a legacy carrier. Sure they don't have first class, FF lounges, etc..., but they are a mature company, with a mature labor force (and the costs that go with it) that is much more in line with legacy carriers. Additionally, on 9/12 you had UA, DL, CO, AA, NW, US, HP, FL, WN, YX, AS, and a few "up and comers" like F9, NK, G4, and others that would grow exponentially toward the middle of the decade. Those 15 named airlines have consolidated down to 8. WN faces an industry that (prior to SARS-Cov-2/COVID-19) was much stronger than the one on 9/10 or 9/12.

They do not have the potential to expand like they did after 9/11 nor do they have the extremely profitable side business that kept this afloat. This is not a dig at WN. They are EXCELLENT at what they do and no airline in the US has the brand loyalty that WN does. I know alot of folks that think it's madness that WN isn't my preferred carrier. I also know people that WN has stranded, delayed, lost their luggage, etc..., handled it poorly, but still defend the brand and come back for more. It takes a lot of doing things right to build up that sort of brand loyalty.

Times may be very lean after SARS-Cov-2/COVID-19. Many businesses are now using videoconferencing like they never have before. Now that they've used it, many may start to question how much they really need to travel. Leisure travelers may very well become more price sensitive and start to value just how cheap they can get from A to B vs whether they need the two free checked bags that they don't necessarily use.

The other three legacies also have the advantage of being able to better match aircraft size to demand. WN cannot do that. On 9/12 and in the decade that followed this wasn't a big deal because they had their fuel hedging operation to subsidize empty seats and cheap seats. I remember flying 1/2 full 737-200s between LBB-DAL-SAT many times between 2001 and 2005 all while WN posted profits. That isn't the case anymore.

I wish WN and all airlines the best. I hope all this is wrong and we pop back to where we were very quickly.
 
phxa340
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 5:53 pm

I have another theory. I strongly believe all of the US3 will remove baggage fees and change fees permanently to get passengers back in the air and to stimulate demand - negating WN’s really only advantage. I think WN is going to be in for some very big surprises, mostly negative, as the US3 have bigger networks (international, regional fleet etc.) for this year and next. I could be wrong but I think the writing is on the wall that the US3 know they need to do whatever it takes to get passengers back in the sky.
 
slcdeltarumd11
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 6:16 pm

Yeah sadly true, but asterisks next to it. None will turn a profit.

I agree I expect the big 3 to be desperate and we will see tons of perks come back for a few years. I can't see them not waiving change fees for a while. Only a few years though, then fees all come back. Demand will come back post vaccine , businesses can't ask people to travel until that is out. They need to get demand back and that's gonna be slow and hard for everyone. Southwest unique benefits will be less than previously. The self service seating I look as a plus though , if someone is coughing you can move or the people who care the most can try to find a space.
 
bob75013
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 6:18 pm

[quote="AMALH747430"

The other three legacies also have the advantage of being able to better match aircraft size to demand. WN cannot do that. .[/quote]


I'd be surprised if WN makes a 2020 profit, but it stands a better chance of avoiding bankruptcy, unlike it's legacy carrier competition.
ye 2019 numbers
in ,000,000


WN current assets $5974 current liabilities $8952
AA current assets $8206 current liabilities $18,311
UA current assets $8194 current liabilities $14,938
DL current assets $8249 current liabilities $20,204

The legacy carriers have a real problem due to drastically lower cash going forward which translates into difficulty in paying the current liabilities, which in comparison to WN's are huge.

edit add: Plus WN's revenue hit will be lower than the legacies, as the cancelled international flights are less impactful for WN than the rest.
Last edited by bob75013 on Thu Apr 09, 2020 6:37 pm, edited 1 time in total.
 
umichman
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 6:34 pm

You are excluding things like long-term debt which isn't reflected in current liabilities. You still have to make payments on those as well. This makes situation even worse for legacies. Especially AA which has significantly more debt that UA or DL.
 
MIflyer12
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 6:39 pm

phxa340 wrote:
I strongly believe all of the US3 will remove baggage fees and change fees permanently to get passengers back in the air...


I'll be happy to take the opposite side of that action. Remove those fees permanently? No way - not while they need Basic Economy products to compete with Spirit, Frontier and Allegiant, which have higher RPM growth rates than the US3 for the past ~decade.
Last edited by MIflyer12 on Thu Apr 09, 2020 6:40 pm, edited 1 time in total.
 
bob75013
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 6:39 pm

umichman wrote:
You are excluding things like long-term debt which isn't reflected in current liabilities. You still have to make payments on those as well. This makes situation even worse for legacies. Especially AA which has significantly more debt that UA or DL.



Actually, the portion of long term debt that is currently payable is counted as a current liability..
 
hohd
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 6:47 pm

WN is no longer immune to the woes of the other Big 3+Alaska. The ULCC's have much lower prices and will price WN aggressively and the 2 bags free wont be a big draw, only the free change fees is still worth it for many, mainly corporate travelers. For Leisure, ULCC's have already eaten into WN's based and will continue to do so. Now one could argue if the leisure is worth pursuing, but for WN whose customer base was built on leisure first, it still matters. Better to have a seat filled with a break even cost rather than go empty.
 
modernArt
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 7:09 pm

phxa340 wrote:
I have another theory. I strongly believe all of the US3 will remove baggage fees and change fees permanently to get passengers back in the air and to stimulate demand .


No change fees and/or fully refundable/changeable tickets should have been a requirement of any U.S. airline taking a bailout.
 
hiflyeras
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 7:12 pm

AA747123 wrote:
I am sure WN will remain profitable through this crisis. In their entire history they have never lost a penny, they will get through this, and with no layoffs


It's now April 9th...not April 1st. Every airline in the world will lose millions if not billions of dollars by the end of 2020, including WN.
 
Lootess
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 7:12 pm

I don't get why people flaunt WN as some LCC, they aren't anymore and have fares usually higher than others. People like to say free bags! Well that doesn't matter when people aren't flying. They can't really justify high fares either, so it's a double whammy.

AA747123 wrote:
I am sure WN will remain profitable through this crisis. In their entire history they have never lost a penny, they will get through this, and with no layoffs


Uh huh, arrogance with Hawaii is already biting them.

Domestic planes with 4 people, often. Yeah that'll pay the bills.
 
airzona11
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 8:20 pm

Low fuel will help once the markets open back up. People will still have to travel for business, people with the means will travel for much-needed vacations. If major restrictions open up sooner, still a chance of getting to even.

WN is the largest California O/D carrier and CA has drastic restrictions inplace that don't seem to be easing anytime soon, that will sting.

questions wrote:
Their business model and fuel hedges saved them in the past.

However, WN is a very different airline today. Importantly, the management team and culture have not evolved and therefore will be more challenged than others in weathering the economic and financial crisis.

WN likes to boast about its history of no bankruptcy and no layoffs. I doubt they will continue to brag in the future. (No. I’m not predicting bankruptcy.)


What do you mean they have not evolved? The tired no first class/no bag fee/no international/only 737s? Who has better near/medium/longer-term financial performance? Their history is accurate and they should boast. The US3 all went through BKs a little over a decade ago, have been having record profitability since and are first in line for government assistance. To be fair, the bar is set low for airlines weather economic challenges.
 
questions
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 8:27 pm

usdcaguy wrote:
Their bragging rights will come from not losing as much as other carriers.


Point is no one should be bragging after this.
 
questions
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 8:30 pm

airzona11 wrote:
Low fuel will help once the markets open back up. People will still have to travel for business, people with the means will travel for much-needed vacations. If major restrictions open up sooner, still a chance of getting to even.

WN is the largest California O/D carrier and CA has drastic restrictions inplace that don't seem to be easing anytime soon, that will sting.

questions wrote:
Their business model and fuel hedges saved them in the past.

However, WN is a very different airline today. Importantly, the management team and culture have not evolved and therefore will be more challenged than others in weathering the economic and financial crisis.

WN likes to boast about its history of no bankruptcy and no layoffs. I doubt they will continue to brag in the future. (No. I’m not predicting bankruptcy.)


What do you mean they have not evolved? The tired no first class/no bag fee/no international/only 737s? Who has better near/medium/longer-term financial performance? Their history is accurate and they should boast. The US3 all went through BKs a little over a decade ago, have been having record profitability since and are first in line for government assistance. To be fair, the bar is set low for airlines weather economic challenges.


The management team and culture. Not referring to product, pricing, network, fleet.
 
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par13del
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 8:43 pm

modernArt wrote:
phxa340 wrote:
I have another theory. I strongly believe all of the US3 will remove baggage fees and change fees permanently to get passengers back in the air and to stimulate demand .


No change fees and/or fully refundable/changeable tickets should have been a requirement of any U.S. airline taking a bailout.

No one has ceased flying because of fees, no one has produced any evidence or been willing to claim that WN numbers are because of their lack of fees, so why would the airlines lower or reduce their fees? If anything, if the government does not directly tax them, they may lower fares and increase fees, if they have to limit the number of folks serving each flight that will be the kicker.

If the tax payers demand to much changes some airlines may elect to forgo government stipulations and just lay off staff and take their chances getting loans on the private market.
 
Bradin
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 9:15 pm

Don't forget Southwest is still making money on cargo. Granted it is 1% of their revenue in FY2019, no bags flying around could represent more cargo space and there is a shortage of cargo capacity presently
 
2175301
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 9:16 pm

bob75013 wrote:
[quote="AMALH747430"

Partial deletion for readability (see above)

WN current assets $5974 current liabilities $8952
AA current assets $8206 current liabilities $18,311
UA current assets $8194 current liabilities $14,938 -: Correction by 2175301: 10K says $8188 & $14,943
DL current assets $8249 current liabilities $20,204

The legacy carriers have a real problem due to drastically lower cash going forward which translates into difficulty in paying the current liabilities, which in comparison to WN's are huge.

edit add: Plus WN's revenue hit will be lower than the legacies, as the cancelled international flights are less impactful for WN than the rest.


Bob75013: I hope you don't mind the correction. All the other Airline numbers check out.

I agree that Southwest will likely do much better as the above information only provides part of the answer.

My opinion is that WN will loose money this year... but will also likely return to profitability faster. I think an above claim that they don't have near the ability to right size aircraft misses on several points. First off the other Majors may not have enough smaller aircraft to fill in - and may have to fly even larger aircraft with a lower utilization. 2nd, my information from the internet is that the Southwest 737-700's seat 137 and their 737-800's seat 175 (from an internet article). That allows them to rightsize within a likely reasonable range. 3rd, they will eliminate flights and layoff people so that overall service matches demand- just as the other airlines will.

Another factor is that WN actually owns the largest percentage of their fleet with the lowest debt against them of all the major US carriers; and can more easily park and store them for the future.

Working from the above numbers by bob75013, with my correction from the United 10K
Looking at the 2019 annual reports (or annual 10K's) I get the following information for end of 2019 status:


Southwest owns 84% of their aircraft (625 out of 747, 122 Leased), with a debt of $8,952 Millions
United owes 82% of their aircraft (635 out of 777, 142 Leased), with a debt of $14,943 Millions
Delta owns 79% of their aircraft (705 out of 898, 193 Leased), with a debt of $20,204 Millions
American owns 56% of their aircraft (525 out of 942, 417 Leased), with a debt of $18,311 Millions

Southwest is in the best position to park and store aircraft. Furthermore 112 of their 122 leased aircraft are the older 737-700 with I understand 38 less seats per aircraft (175-137). So the vast majority of the airplanes they need to fly to make revenue for lease payments just happen to be their smallest aircraft. The 737-700 They are also on average their oldest aircraft and likely have the lowest lease payments.

While the other Airlines Annual Reports and 10K's did not have the same information as the SW Annual Report on which aircraft was leased and average age... Southwest still has the highest ownership % and the best debt to asset ratio by far.

Have a great day,
 
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IrishAyes
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 9:25 pm

phxa340 wrote:
I have another theory. I strongly believe all of the US3 will remove baggage fees and [photoid][/photoid]change fees permanently to get passengers back in the air and to stimulate demand - negating WN’s really only advantage. I think WN is going to be in for some very big surprises, mostly negative, as the US3 have bigger networks (international, regional fleet etc.) for this year and next. I could be wrong but I think the writing is on the wall that the US3 know they need to do whatever it takes to get passengers back in the sky.


Interesting theory, but I wonder if it introduces a lot of assumptions as well. Airlines earn INSANE amounts of revenue on bag fees (and change/cancel fees, which have become kaput). Furthermore, if the macro impacts of COVID19 result in a huge drop in discretionary spending, then subsequently, leisure travel will be greatly impacted (and I think it is a fair assumption that business travelers, which will be the segment to recover the fastest in the travel spend sector, do not check bags as often or get them for free as is, as part of elite status/credit card possession).

Another data point: WN's operating costs are still lower than the US3, which is still advantageous for them. Of course, the gap has been narrowed significantly since 9/11 (and are also different from 2008/2009 which was pre-merger for most of the big 4 and pre-ch 11 for American).

Either way, will be curious to see if your theory unfolds.
 
Lootess
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 9:32 pm

IrishAyes wrote:
phxa340 wrote:
I have another theory. I strongly believe all of the US3 will remove baggage fees and [photoid][/photoid]change fees permanently to get passengers back in the air and to stimulate demand - negating WN’s really only advantage. I think WN is going to be in for some very big surprises, mostly negative, as the US3 have bigger networks (international, regional fleet etc.) for this year and next. I could be wrong but I think the writing is on the wall that the US3 know they need to do whatever it takes to get passengers back in the sky.


Interesting theory, but I wonder if it introduces a lot of assumptions as well. Airlines earn INSANE amounts of revenue on bag fees (and change/cancel fees, which have become kaput). Furthermore, if the macro impacts of COVID19 result in a huge drop in discretionary spending, then subsequently, leisure travel will be greatly impacted (and I think it is a fair assumption that business travelers, which will be the segment to recover the fastest in the travel spend sector, do not check bags as often or get them for free as is, as part of elite status/credit card possession).

Another data point: WN's operating costs are still lower than the US3, which is still advantageous for them. Of course, the gap has been narrowed significantly since 9/11 (and are also different from 2008/2009 which was pre-merger for most of the big 4 and pre-ch 11 for American).

Either way, will be curious to see if your theory unfolds.


lol, lower costs yet they weren't even making the most money in good times, and that means less in the bank coffers. Delta was paying down debt like mad crazy over the years, big difference.
 
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TVNWZ
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 9:43 pm

modernArt wrote:
phxa340 wrote:
I have another theory. I strongly believe all of the US3 will remove baggage fees and change fees permanently to get passengers back in the air and to stimulate demand .


No change fees and/or fully refundable/changeable tickets should have been a requirement of any U.S. airline taking a bailout.


You can get fully refundable tickets on any airline right now. Or you can elect not to. Entirely up to you.
 
avi8
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 10:03 pm

People say WN is no longer what the my used to be, yet last year was a record year for them despite the MAX grounding. They are the largest domestic airline and have NO presence in online booking sights, ALL bookings are made directly through their website. That just tells you how much loyalty they have.

WN will likely lose some money this quarter and the next but overall they might still make some small profit overall.
avi8
 
tphuang
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Thu Apr 09, 2020 10:13 pm

Southwest is in a better position to get through this than anyone else which is probably why they have also cut the least proportion of its flights.

Let’s not kid of ourselves, they are going to lose a lot of money this year. Why else would they need cares grant? People are really not seeing how bad things are for the airlines. I also would not be surprised if they also lose money in 2021. Really depends on how things look the next few months.
 
11C
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 12:20 am

avi8 wrote:
People say WN is no longer what the my used to be, yet last year was a record year for them despite the MAX grounding. They are the largest domestic airline and have NO presence in online booking sights, ALL bookings are made directly through their website. That just tells you how much loyalty they have.

WN will likely lose some money this quarter and the next but overall they might still make some small profit overall.


We will have to check back on that, but I’m guessing not.
 
Lootess
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 1:08 am

avi8 wrote:
People say WN is no longer what the my used to be, yet last year was a record year for them despite the MAX grounding. They are the largest domestic airline and have NO presence in online booking sights, ALL bookings are made directly through their website. That just tells you how much loyalty they have.

WN will likely lose some money this quarter and the next but overall they might still make some small profit overall.


Not true, they couldn't force all their corp customers on SWABIZ, Southwest does integrate with all the big corp sites out like there like Concur, GetThere, Orbitz allowing full comparison between all carriers and aligning to corporate policies. Nice try though.
 
avi8
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Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 2:12 am

Lootess wrote:
avi8 wrote:
People say WN is no longer what the my used to be, yet last year was a record year for them despite the MAX grounding. They are the largest domestic airline and have NO presence in online booking sights, ALL bookings are made directly through their website. That just tells you how much loyalty they have.

WN will likely lose some money this quarter and the next but overall they might still make some small profit overall.


Not true, they couldn't force all their corp customers on SWABIZ, Southwest does integrate with all the big corp sites out like there like Concur, GetThere, Orbitz allowing full comparison between all carriers and aligning to corporate policies. Nice try though.


Yes. True. But you don’t buy southwest tickets on Expedia or Kayak, that’s what I meant.
avi8
 
crj900lr
Posts: 484
Joined: Fri Mar 18, 2011 1:44 am

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 2:22 am

I believe the 700's seat 143 not 137.
 
jetwet1
Posts: 3243
Joined: Thu Jun 14, 2007 4:42 am

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 2:29 am

Lootess wrote:
I don't get why people flaunt WN as some LCC, they aren't anymore and have fares usually higher than others. People like to say free bags! Well that doesn't matter when people aren't flying. They can't really justify high fares either, so it's a double whammy.


Uh huh, arrogance with Hawaii is already biting them.

Domestic planes with 4 people, often. Yeah that'll pay the bills.


Arrogance with Hawaii ? Care to explain that one please.

Domestic with 4 passengers, I hate to tell you this, but right now ALL airlines are suffering through record low passenger numbers, from the smallest to the biggest, including Southwest.
 
737MAX7
Posts: 154
Joined: Mon Nov 13, 2017 7:26 pm

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 2:29 am

2175301 wrote:
bob75013 wrote:
[quote="AMALH747430"

Partial deletion for readability (see above)

WN current assets $5974 current liabilities $8952
AA current assets $8206 current liabilities $18,311
UA current assets $8194 current liabilities $14,938 -: Correction by 2175301: 10K says $8188 & $14,943
DL current assets $8249 current liabilities $20,204

The legacy carriers have a real problem due to drastically lower cash going forward which translates into difficulty in paying the current liabilities, which in comparison to WN's are huge.

edit add: Plus WN's revenue hit will be lower than the legacies, as the cancelled international flights are less impactful for WN than the rest.


Bob75013: I hope you don't mind the correction. All the other Airline numbers check out.

I agree that Southwest will likely do much better as the above information only provides part of the answer.

My opinion is that WN will loose money this year... but will also likely return to profitability faster. I think an above claim that they don't have near the ability to right size aircraft misses on several points. First off the other Majors may not have enough smaller aircraft to fill in - and may have to fly even larger aircraft with a lower utilization. 2nd, my information from the internet is that the Southwest 737-700's seat 137 and their 737-800's seat 175 (from an internet article). That allows them to rightsize within a likely reasonable range. 3rd, they will eliminate flights and layoff people so that overall service matches demand- just as the other airlines will.

Another factor is that WN actually owns the largest percentage of their fleet with the lowest debt against them of all the major US carriers; and can more easily park and store them for the future.

Working from the above numbers by bob75013, with my correction from the United 10K
Looking at the 2019 annual reports (or annual 10K's) I get the following information for end of 2019 status:


Southwest owns 84% of their aircraft (625 out of 747, 122 Leased), with a debt of $8,952 Millions
United owes 82% of their aircraft (635 out of 777, 142 Leased), with a debt of $14,943 Millions
Delta owns 79% of their aircraft (705 out of 898, 193 Leased), with a debt of $20,204 Millions
American owns 56% of their aircraft (525 out of 942, 417 Leased), with a debt of $18,311 Millions

Southwest is in the best position to park and store aircraft. Furthermore 112 of their 122 leased aircraft are the older 737-700 with I understand 38 less seats per aircraft (175-137). So the vast majority of the airplanes they need to fly to make revenue for lease payments just happen to be their smallest aircraft. The 737-700 They are also on average their oldest aircraft and likely have the lowest lease payments.

While the other Airlines Annual Reports and 10K's did not have the same information as the SW Annual Report on which aircraft was leased and average age... Southwest still has the highest ownership % and the best debt to asset ratio by far.

Have a great day,


Quick correction, our -700s have 143, MAX 7’s will have 150 :)
 
AMALH747430
Posts: 196
Joined: Tue Mar 11, 2014 9:29 pm

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 2:30 am

WN 737-700s actually hold 143 passengers. Original capacity was 137. It was increased to 143 with the “evolve” mods.

2175301 wrote:
bob75013 wrote:
[quote="AMALH747430"

Partial deletion for readability (see above)

WN current assets $5974 current liabilities $8952
AA current assets $8206 current liabilities $18,311
UA current assets $8194 current liabilities $14,938 -: Correction by 2175301: 10K says $8188 & $14,943
DL current assets $8249 current liabilities $20,204

The legacy carriers have a real problem due to drastically lower cash going forward which translates into difficulty in paying the current liabilities, which in comparison to WN's are huge.

edit add: Plus WN's revenue hit will be lower than the legacies, as the cancelled international flights are less impactful for WN than the rest.


Bob75013: I hope you don't mind the correction. All the other Airline numbers check out.

I agree that Southwest will likely do much better as the above information only provides part of the answer.

My opinion is that WN will loose money this year... but will also likely return to profitability faster. I think an above claim that they don't have near the ability to right size aircraft misses on several points. First off the other Majors may not have enough smaller aircraft to fill in - and may have to fly even larger aircraft with a lower utilization. 2nd, my information from the internet is that the Southwest 737-700's seat 137 and their 737-800's seat 175 (from an internet article). That allows them to rightsize within a likely reasonable range. 3rd, they will eliminate flights and layoff people so that overall service matches demand- just as the other airlines will.

Another factor is that WN actually owns the largest percentage of their fleet with the lowest debt against them of all the major US carriers; and can more easily park and store them for the future.

Working from the above numbers by bob75013, with my correction from the United 10K
Looking at the 2019 annual reports (or annual 10K's) I get the following information for end of 2019 status:


Southwest owns 84% of their aircraft (625 out of 747, 122 Leased), with a debt of $8,952 Millions
United owes 82% of their aircraft (635 out of 777, 142 Leased), with a debt of $14,943 Millions
Delta owns 79% of their aircraft (705 out of 898, 193 Leased), with a debt of $20,204 Millions
American owns 56% of their aircraft (525 out of 942, 417 Leased), with a debt of $18,311 Millions

Southwest is in the best position to park and store aircraft. Furthermore 112 of their 122 leased aircraft are the older 737-700 with I understand 38 less seats per aircraft (175-137). So the vast majority of the airplanes they need to fly to make revenue for lease payments just happen to be their smallest aircraft. The 737-700 They are also on average their oldest aircraft and likely have the lowest lease payments.

While the other Airlines Annual Reports and 10K's did not have the same information as the SW Annual Report on which aircraft was leased and average age... Southwest still has the highest ownership % and the best debt to asset ratio by far.

Have a great day,
 
2175301
Posts: 1898
Joined: Wed May 16, 2007 11:19 am

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 2:37 am

737MAX7 wrote:
2175301 wrote:

Partial Delete

2nd, my information from the internet is that the Southwest 737-700's seat 137 and their 737-800's seat 175 (from an internet article).


Quick correction, our -700s have 143, MAX 7’s will have 150 :)


AMALH747430 wrote:
WN 737-700s actually hold 143 passengers. Original capacity was 137. It was increased to 143 with the “evolve” mods.


Thanks for providing the correct information. :)
 
texdravid
Posts: 1829
Joined: Fri May 14, 2004 3:21 pm

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 3:48 am

modernArt wrote:
phxa340 wrote:
I have another theory. I strongly believe all of the US3 will remove baggage fees and change fees permanently to get passengers back in the air and to stimulate demand .


No change fees and/or fully refundable/changeable tickets should have been a requirement of any U.S. airline taking a bailout.



Here here. Absolutely. Not to mention making rewards programs easier and less stringent.
Tort reform now. Throw lawyers in jail later.
 
User avatar
Laulau
Posts: 35
Joined: Wed Feb 21, 2018 7:56 pm

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 4:19 am

jetwet1 wrote:
Lootess wrote:
I don't get why people flaunt WN as some LCC, they aren't anymore and have fares usually higher than others. People like to say free bags! Well that doesn't matter when people aren't flying. They can't really justify high fares either, so it's a double whammy.


Uh huh, arrogance with Hawaii is already biting them.

Domestic planes with 4 people, often. Yeah that'll pay the bills.


Arrogance with Hawaii ? Care to explain that one please.

https://onemileatatime.com/southwest-ai ... aii-shark/
Last edited by Laulau on Fri Apr 10, 2020 4:40 am, edited 3 times in total.
 
planecane
Posts: 1579
Joined: Thu Feb 09, 2017 4:58 pm

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 4:33 am

I'd say it will be very difficult for any airline to turn a profit this year. I have an FLL-MDW round trip in May that I rebooked at $45 each way. Prior to that, the lowest fare I've ever booked was $49 each way FLL-TPA.

With very low load factors and ridiculously cheap tickets they have to lose money on every flight.
 
WayexTDI
Posts: 1820
Joined: Fri Sep 21, 2018 4:38 pm

Re: Will this be the year Southwest Airlines finally doesn't make a profit?

Fri Apr 10, 2020 5:46 am

avi8 wrote:
Lootess wrote:
avi8 wrote:
People say WN is no longer what the my used to be, yet last year was a record year for them despite the MAX grounding. They are the largest domestic airline and have NO presence in online booking sights, ALL bookings are made directly through their website. That just tells you how much loyalty they have.

WN will likely lose some money this quarter and the next but overall they might still make some small profit overall.


Not true, they couldn't force all their corp customers on SWABIZ, Southwest does integrate with all the big corp sites out like there like Concur, GetThere, Orbitz allowing full comparison between all carriers and aligning to corporate policies. Nice try though.


Yes. True. But you don’t buy southwest tickets on Expedia or Kayak, that’s what I meant.

But that's not what you said.
You said "They [...] have NO presence in online booking sights, ALL bookings are made directly through their website"; which is incorrect.

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