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MIflyer12
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Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 12:21 pm

http://www.southwestairlinesinvestorrel ... -110107839

That's a detailed press release, citing changes to capacity by month, and load factors. Everyone interested in industry analytics should have a good look.

The projection of revenues to be down 90-95% y-o-y for April and May means 2Q20 is going to be ugly, but starting with high margins is the best place from which to start. They haven't cut capacity on the same scale so load factors are projected to be 5-10%. Roomy!

This puts-paid to the idea that Southwest could weather this without reporting a loss. No business with high fixed costs (and that means people in this context) can make money with revenues off 90%.
 
tphuang
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 1:23 pm

I'm really not sure what GK is doing. Everyone else is cutting capacity by 80 to 95% and WN is cutting by 60 to 70% and getting 6% in LF. It's completely ridiculous.

They estimate to have burn rate of 30 to 35 million a day this quarter. To put things into perspective, DL has more than twice WN's cost in Q4 of last year and they expect to be able to lower burn rate to $50 million a day by second half of this quarter.

They seem to be intent on burning the great financial advantage they have over everyone else with all this unnecessary flying.

The good news is that they have $6.8 billion in cash reserves right now with another $1.6 billion coming from PSP. So $8.4 billion. Even at $35 million a day for another 67 days, they should have over $6 billion in reserves at end of this quarter. They are certainly in no danger of the courts, but burning more cash now would give them less resource to make moves coming out of this like merging with B6 or NK.
 
ethernal
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 1:45 pm

tphuang wrote:
I'm really not sure what GK is doing. Everyone else is cutting capacity by 80 to 95% and WN is cutting by 60 to 70% and getting 6% in LF. It's completely ridiculous.


In fairness, Southwest's focus on P2P flying probably makes it a bit harder to cut routes and maintain connectivity than it is for the legacies. It's easy for Delta to cut 80% of capacity out of Atlanta when it just means changing ATL-RDU from 13x a day to 2-3x a day. When they only fly 1 or 2 flights a day between two city-pairs, cutting that means eliminating that service entirely without some very odd routing. The dynamic factors of this also become more difficult (out-and-backs are easy scheduling as you don't have to worry about where the plane is since it returns to the hub where it becomes a fungible resource with any other routes).

That said, it's only a partial excuse. I think it is highlighting a bit of lack of maturity in Southwest's organization and IT system to respond dynamically to events like this: it mirrors the relative operational maturity of the carriers. Delta has been most agile in responding to this, followed closely by United. American has been slow - and Southwest has been even slower. If I had to rank the airline's operational maturity (in context of complexity), that is probably how I would have ordered them so perhaps it shouldn't be surprising that Southwest is a laggard here.

One could also argue there is a touch of hubris here too (although Delta is legendary for management hubris so perhaps that's a red herring). I say that because Southwest has never faced an existential crisis - the thought of bankruptcy just doesn't compute for any of the lifers there. Compare that to AA, Delta, and United where any long term employee has been through at least one round of bankruptcy and understand the harsh realities of what that means.
 
ericm2031
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 1:55 pm

tphuang wrote:
The good news is that they have $6.8 billion in cash reserves right now with another $1.6 billion coming from PSP. So $8.4 billion. Even at $35 million a day for another 67 days, they should have over $6 billion in reserves at end of this quarter. They are certainly in no danger of the courts, but burning more cash now would give them less resource to make moves coming out of this like merging with B6 or NK.


$6.8B is just what they have raised this year. They have cash and short term investments of $9.3B, not including the next $1.6B from PSP.

Plus unencumbered assets of $8B and the potential to take the $2.8B CARES loan.
 
tphuang
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 2:04 pm

ericm2031 wrote:
tphuang wrote:
The good news is that they have $6.8 billion in cash reserves right now with another $1.6 billion coming from PSP. So $8.4 billion. Even at $35 million a day for another 67 days, they should have over $6 billion in reserves at end of this quarter. They are certainly in no danger of the courts, but burning more cash now would give them less resource to make moves coming out of this like merging with B6 or NK.


$6.8B is just what they have raised this year. They have cash and short term investments of $9.3B, not including the next $1.6B from PSP.

Plus unencumbered assets of $8B and the potential to take the $2.8B CARES loan.

That's fair, but does not change my point that they have a lot of cash, but are burning more than they need to.
 
Lootess
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 2:44 pm

Even Gary Kelly recognizes that it could be the end of no involuntary furloughs if things don't get better in his latest Ask Gary. But like a lot of you I don't think they cut enough capacity either.

https://youtu.be/cj7B6wUDl1A
 
Lootess
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 4:02 pm

Revenue fell by $915 million, so a $77 million quarter loss, first since 2009. They aren't getting out of this with any profits, spin it all you want. You can't win with a business model that projects 10% LF.
 
mcdu
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 5:56 pm

The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting.

Also like all the airlines an unencumbered asset changes in value based on the market. What might be valuable today may be worthless tomorrow. The value can fluctuate greatly especially in times of contraction in the industry.
 
737max8
Posts: 614
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 6:29 pm

mcdu wrote:
The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting.

Also like all the airlines an unencumbered asset changes in value based on the market. What might be valuable today may be worthless tomorrow. The value can fluctuate greatly especially in times of contraction in the industry.


Yet they suffer less than UA/AA/DL so what's your point?
The thoughts and opinions expressed in my comments do not represent that of any airline or affiliate.
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ordbosewr
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 7:14 pm

ericm2031 wrote:
tphuang wrote:
The good news is that they have $6.8 billion in cash reserves right now with another $1.6 billion coming from PSP. So $8.4 billion. Even at $35 million a day for another 67 days, they should have over $6 billion in reserves at end of this quarter. They are certainly in no danger of the courts, but burning more cash now would give them less resource to make moves coming out of this like merging with B6 or NK.


$6.8B is just what they have raised this year. They have cash and short term investments of $9.3B, not including the next $1.6B from PSP.

Plus unencumbered assets of $8B and the potential to take the $2.8B CARES loan.


They have the best cash position of all US airlines and frankly I agree with other saying, why are they deciding to risk that. They can come out the other end of this in the best position, but will they need that cash then or now.

Also, to say anyone has X in assets they can use for liquidity is kindda useless. Nobody says any of those assets are really worth that. WN couldn't find a seller for all those assets at that price today. They could get a portion of that, but frankly the only thing that matters today is CASH..... everything else is (pretty much) worthless...
 
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PacoMartin
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 10:16 pm

Southwest managed to reduce
-6.2% Salaries, wages, and benefits
-14.3% Fuel and oil
-7.2% Maintenance materials and repairs

Southwest could not maintain a profit in light of

Revenue passenger miles (RPMs) (in millions) down 22.0%
Available seat miles (ASMs) (in millions) down only 6.7%
Seats flown (000s) down only 4.7%

OPERATING REVENUES: $million
Total operating revenues $4,234 from $5,149 first quarter last year -17.8%
OPERATING EXPENSES: $million
Total operating expenses $4,344 from $4,644 first quarter last year -6.5%
OPERATING INCOME (LOSS) -$110 from +$505 first quarter last year

The Company ended first quarter 2020 with 742 aircraft in its fleet. In response to capacity reductions due to the effects of the pandemic, the Company currently has approximately 350 aircraft in long-term storage or temporary parking. This is in addition to the Company's 34 MAX aircraft that were grounded as of March 13, 2019, to comply with the Federal Aviation Administration ("FAA") emergency order issued for all U.S. airlines to ground all MAX aircraft.
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airzona11
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Re: Southwest 1Q20 income: ($144 million) before taxes

Tue Apr 28, 2020 11:54 pm

This event is a cold start reminder of the old adage, cash is king. Companies have moved to more leveraged balance sheets and now is the time where cash is needed. They have arguably one of the strongest cash positions, while it too is not infinite, it will help endure longer (employees wages etc).

mcdu wrote:
The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting.

Also like all the airlines an unencumbered asset changes in value based on the market. What might be valuable today may be worthless tomorrow. The value can fluctuate greatly especially in times of contraction in the industry.


Are you saying their model is not built for an unforeseen event that causes drastic and immediate actions that have never been seen before? The flow of traffic at WN still is heavy across consolidated airports. Their model is more reliant on O/D which in no way makes them more vulnerable. Look at EK with1 hub as the other extreme, how are they fairing? The WN business model is not "suffering greatly" relative to any other airline.
 
mcdu
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Re: Southwest 1Q20 income: ($144 million) before taxes

Wed Apr 29, 2020 6:50 pm

airzona11 wrote:
This event is a cold start reminder of the old adage, cash is king. Companies have moved to more leveraged balance sheets and now is the time where cash is needed. They have arguably one of the strongest cash positions, while it too is not infinite, it will help endure longer (employees wages etc).

mcdu wrote:
The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting.

Also like all the airlines an unencumbered asset changes in value based on the market. What might be valuable today may be worthless tomorrow. The value can fluctuate greatly especially in times of contraction in the industry.


Are you saying their model is not built for an unforeseen event that causes drastic and immediate actions that have never been seen before? The flow of traffic at WN still is heavy across consolidated airports. Their model is more reliant on O/D which in no way makes them more vulnerable. Look at EK with1 hub as the other extreme, how are they fairing? The WN business model is not "suffering greatly" relative to any other airline.


Southwest is forced to fly a lot of flights due to the structure of the airline versus their competition. EK with a single hub can cull flights easier than WN and it’s linear routings. All airlines will lose money in this market. The other airlines can reduce a greater amount of money losing service versus WN due to hub and spoke structures.
 
tphuang
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Re: Southwest 1Q20 income: ($144 million) before taxes

Wed Apr 29, 2020 7:35 pm

mcdu wrote:
airzona11 wrote:
This event is a cold start reminder of the old adage, cash is king. Companies have moved to more leveraged balance sheets and now is the time where cash is needed. They have arguably one of the strongest cash positions, while it too is not infinite, it will help endure longer (employees wages etc).

mcdu wrote:
The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting.

Also like all the airlines an unencumbered asset changes in value based on the market. What might be valuable today may be worthless tomorrow. The value can fluctuate greatly especially in times of contraction in the industry.


Are you saying their model is not built for an unforeseen event that causes drastic and immediate actions that have never been seen before? The flow of traffic at WN still is heavy across consolidated airports. Their model is more reliant on O/D which in no way makes them more vulnerable. Look at EK with1 hub as the other extreme, how are they fairing? The WN business model is not "suffering greatly" relative to any other airline.


Southwest is forced to fly a lot of flights due to the structure of the airline versus their competition. EK with a single hub can cull flights easier than WN and it’s linear routings. All airlines will lose money in this market. The other airlines can reduce a greater amount of money losing service versus WN due to hub and spoke structures.


They are flying a lot of flights due to their own willingness. They can fly 15% of their schedule and still be compliant with PSP. I'm not sure why they are reluctant to do so.
 
rumorboy
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Re: Southwest 1Q20 income: ($144 million) before taxes

Wed Apr 29, 2020 8:26 pm

https://seekingalpha.com/article/434075 ... art=single

Here is some color on this subject from Gary Kelly. This was asked by airline analyst Mike Linenberg.

Gary Kelly

"I think it's positioned really well. And if the traffic isn't there, we're going to -- we'll be aggressive in cutting expenses. And the other thing that we're trying to do here is reach a goal or a milestone of producing a cash profit, just looking at the flight operating costs. So bringing in a little -- while it might appear on the surface that there's too much capacity, that's still cash positive, if you will, even though it may not be enough cash to cover overhead. That's still saying that it's better to fly that flight and use that airplane as opposed to letting it just sit there on the ground."

Also commenting is the president of Southwest Airlines Thomas Nealon.

Thomas Nealon

"I'll jump on that one. Mike, I actually like where we are at this point with our reductions for April, May and June. If we need to take more capacity out, we can. It's just -- honestly, it's a lot easier to take capacity out than it is to put capacity back in. And I'd like to maintain as many itineraries as we possibly can. And I'll just respond accordingly. But I think at this point, if you look at where we are, take me, for example, our ASMs are down about 65%, but we're only reducing our O&D markets by 28%. So we're maintaining itineraries. Now that's quite different than the mix of our competition. So I feel really good that we are serving the markets. We have product out of the shelf, if you will. And if the product isn't selling, we'll take it out. That's what the operation is like, we'll take it and then you'll see we'll pull the capacity out. It's just very hard to put it back in. So I'd rather have it on hand and pull it out as necessary."
 
airzona11
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Re: Southwest 1Q20 income: ($144 million) before taxes

Wed Apr 29, 2020 8:26 pm

mcdu wrote:
airzona11 wrote:
This event is a cold start reminder of the old adage, cash is king. Companies have moved to more leveraged balance sheets and now is the time where cash is needed. They have arguably one of the strongest cash positions, while it too is not infinite, it will help endure longer (employees wages etc).

mcdu wrote:
The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting.

Also like all the airlines an unencumbered asset changes in value based on the market. What might be valuable today may be worthless tomorrow. The value can fluctuate greatly especially in times of contraction in the industry.


Are you saying their model is not built for an unforeseen event that causes drastic and immediate actions that have never been seen before? The flow of traffic at WN still is heavy across consolidated airports. Their model is more reliant on O/D which in no way makes them more vulnerable. Look at EK with1 hub as the other extreme, how are they fairing? The WN business model is not "suffering greatly" relative to any other airline.


Southwest is forced to fly a lot of flights due to the structure of the airline versus their competition. EK with a single hub can cull flights easier than WN and it’s linear routings. All airlines will lose money in this market. The other airlines can reduce a greater amount of money losing service versus WN due to hub and spoke structures.


What airline is performing better than WN right now? Looking at any available data, I don't think there is one. The whole purpose of a hub is economies of scale, more reliant on connections vs O/D. What happens when your only hub shuts down (EK)? Or what about when your large hubs in NYC shut down (B6/DL/AA/UA)? Not only is nationwide and global traffic down, the largest cities have the highest number of cases, impacting those cities (hubs) more.

Hubs are not saving any airlines.
 
mcdu
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Re: Southwest 1Q20 income: ($144 million) before taxes

Wed Apr 29, 2020 10:59 pm

airzona11 wrote:
mcdu wrote:
airzona11 wrote:
This event is a cold start reminder of the old adage, cash is king. Companies have moved to more leveraged balance sheets and now is the time where cash is needed. They have arguably one of the strongest cash positions, while it too is not infinite, it will help endure longer (employees wages etc).



Are you saying their model is not built for an unforeseen event that causes drastic and immediate actions that have never been seen before? The flow of traffic at WN still is heavy across consolidated airports. Their model is more reliant on O/D which in no way makes them more vulnerable. Look at EK with1 hub as the other extreme, how are they fairing? The WN business model is not "suffering greatly" relative to any other airline.


Southwest is forced to fly a lot of flights due to the structure of the airline versus their competition. EK with a single hub can cull flights easier than WN and it’s linear routings. All airlines will lose money in this market. The other airlines can reduce a greater amount of money losing service versus WN due to hub and spoke structures.


What airline is performing better than WN right now? Looking at any available data, I don't think there is one. The whole purpose of a hub is economies of scale, more reliant on connections vs O/D. What happens when your only hub shuts down (EK)? Or what about when your large hubs in NYC shut down (B6/DL/AA/UA)? Not only is nationwide and global traffic down, the largest cities have the highest number of cases, impacting those cities (hubs) more.

Hubs are not saving any airlines.


On what level are you claiming that WN is performing better than? They are flying flights with single digit customers and load factors according to their own CEO.

Even their own pilots are posting what small loads they are carrying on other forums. You paint a rosy picture when it is anything but rosy for ALL airlines.

Some of the benefits that have helped WN in years past are hurting them a bit during the pandemic.

If you want to discuss the other carriers and hubs this would be a great opportunity for you to open that topic and we can discuss it there. But if I read this topic correctly it is in reference to WN.
 
airzona11
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Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 12:53 am

mcdu wrote:
airzona11 wrote:
mcdu wrote:

Southwest is forced to fly a lot of flights due to the structure of the airline versus their competition. EK with a single hub can cull flights easier than WN and it’s linear routings. All airlines will lose money in this market. The other airlines can reduce a greater amount of money losing service versus WN due to hub and spoke structures.


What airline is performing better than WN right now? Looking at any available data, I don't think there is one. The whole purpose of a hub is economies of scale, more reliant on connections vs O/D. What happens when your only hub shuts down (EK)? Or what about when your large hubs in NYC shut down (B6/DL/AA/UA)? Not only is nationwide and global traffic down, the largest cities have the highest number of cases, impacting those cities (hubs) more.

Hubs are not saving any airlines.


On what level are you claiming that WN is performing better than? They are flying flights with single digit customers and load factors according to their own CEO.

Even their own pilots are posting what small loads they are carrying on other forums. You paint a rosy picture when it is anything but rosy for ALL airlines.

Some of the benefits that have helped WN in years past are hurting them a bit during the pandemic.

If you want to discuss the other carriers and hubs this would be a great opportunity for you to open that topic and we can discuss it there. But if I read this topic correctly it is in reference to WN.


Your original premise was that "The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting."
To which I have stated that I am don't believe there is any data that supports WN is worse off because of their model vs Hub and spoke. To which I have given examples. I maintain my point, there is no data to suggest their model has them more at risk or hurting more than any other airline.
 
jetwet1
Posts: 3222
Joined: Thu Jun 14, 2007 4:42 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 1:45 pm

mcdu wrote:

On what level are you claiming that WN is performing better than?


AA -$2.2B
UA -$2.1B
DL -$607M

WN -$144M

So I would say they are performing better in the P/L category
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 2:09 pm

[twoid][/twoid]
jetwet1 wrote:
mcdu wrote:

On what level are you claiming that WN is performing better than?


AA -$2.2B
UA -$2.1B
DL -$607M

WN -$144M

So I would say they are performing better in the P/L category


That was a quarterly earnings. Much like the way Southwest has to operate those linear routes because of the way the airlines is constructed hurts their ability to cancel to the level of demand. Southwest was insulated by virtue of its domestic route structure from what the other carriers had for international exposure. The 3Q will be a tale of the tape. But you can’t just look at the loss as a direct comparison. The loss numbers don’t take in the whole picture.

The international markets were being hit in February for the international carriers. Domestic didn’t see the drastic changes until late March.
 
Pontius
Posts: 69
Joined: Thu Dec 07, 2017 8:19 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 2:10 pm

jetwet1 wrote:
mcdu wrote:

On what level are you claiming that WN is performing better than?


AA -$2.2B
UA -$2.1B
DL -$607M

WN -$144M

So I would say they are performing better in the P/L category


Apples/Oranges. International exposure accounts for most of this difference. UA's Pacific operation was getting walloped as far back as February.
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 2:13 pm

airzona11 wrote:
mcdu wrote:
airzona11 wrote:

What airline is performing better than WN right now? Looking at any available data, I don't think there is one. The whole purpose of a hub is economies of scale, more reliant on connections vs O/D. What happens when your only hub shuts down (EK)? Or what about when your large hubs in NYC shut down (B6/DL/AA/UA)? Not only is nationwide and global traffic down, the largest cities have the highest number of cases, impacting those cities (hubs) more.

Hubs are not saving any airlines.


On what level are you claiming that WN is performing better than? They are flying flights with single digit customers and load factors according to their own CEO.

Even their own pilots are posting what small loads they are carrying on other forums. You paint a rosy picture when it is anything but rosy for ALL airlines.

Some of the benefits that have helped WN in years past are hurting them a bit during the pandemic.

If you want to discuss the other carriers and hubs this would be a great opportunity for you to open that topic and we can discuss it there. But if I read this topic correctly it is in reference to WN.


Your original premise was that "The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting."
To which I have stated that I am don't believe there is any data that supports WN is worse off because of their model vs Hub and spoke. To which I have given examples. I maintain my point, there is no data to suggest their model has them more at risk or hurting more than any other airline.



Why is WN flying single digit passenger flights? The other carriers are matching flights to demand and WN is wasting a lot of money flying empty planes.

One of my friends just rode them and there were 9 people on the flight to FL. The crew told him that was the most passengers they had in 3 days.
 
Flflyer83
Posts: 69
Joined: Tue Apr 14, 2020 4:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 2:31 pm

mcdu wrote:
airzona11 wrote:
mcdu wrote:

On what level are you claiming that WN is performing better than? They are flying flights with single digit customers and load factors according to their own CEO.

Even their own pilots are posting what small loads they are carrying on other forums. You paint a rosy picture when it is anything but rosy for ALL airlines.

Some of the benefits that have helped WN in years past are hurting them a bit during the pandemic.

If you want to discuss the other carriers and hubs this would be a great opportunity for you to open that topic and we can discuss it there. But if I read this topic correctly it is in reference to WN.


Your original premise was that "The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting."
To which I have stated that I am don't believe there is any data that supports WN is worse off because of their model vs Hub and spoke. To which I have given examples. I maintain my point, there is no data to suggest their model has them more at risk or hurting more than any other airline.



Why is WN flying single digit passenger flights? The other carriers are matching flights to demand and WN is wasting a lot of money flying empty planes.

One of my friends just rode them and there were 9 people on the flight to FL. The crew told him that was the most passengers they had in 3 days.



A friend of mine is a a319/20/21 pilot for AA and he’s usually on the 321 and hasn’t had more than 20 passengers in weeks if we’re using anecdotal evidence as to performance.
 
User avatar
Polot
Posts: 10633
Joined: Thu Jul 28, 2011 3:01 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 2:39 pm

Flflyer83 wrote:
mcdu wrote:
airzona11 wrote:

Your original premise was that "The Southwest model suffers greatly from the lack of a hub system. Not being able to pull down markets due to how the flights/aircraft are routed is hurting."
To which I have stated that I am don't believe there is any data that supports WN is worse off because of their model vs Hub and spoke. To which I have given examples. I maintain my point, there is no data to suggest their model has them more at risk or hurting more than any other airline.



Why is WN flying single digit passenger flights? The other carriers are matching flights to demand and WN is wasting a lot of money flying empty planes.

One of my friends just rode them and there were 9 people on the flight to FL. The crew told him that was the most passengers they had in 3 days.



A friend of mine is a a319/20/21 pilot for AA and he’s usually on the 321 and hasn’t had more than 20 passengers in weeks if we’re using anecdotal evidence as to performance.

MCDU’s statement is very odd as it implies that the US legacies/hub airlines are matching aircraft size with demand and flying around generally full planes.

When in reality just like WN they are currently flying mostly air with often times single digit load factors. Demand is nil at the moment. Even 50 seaters are too large to match demand for most routes, and of course the majors don’t actually operate those, they farm them out.
 
airzona11
Posts: 1755
Joined: Wed Dec 17, 2014 5:44 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 3:09 pm

mcdu wrote:
[twoid][/twoid]
jetwet1 wrote:
mcdu wrote:

On what level are you claiming that WN is performing better than?


AA -$2.2B
UA -$2.1B
DL -$607M

WN -$144M

So I would say they are performing better in the P/L category


That was a quarterly earnings. Much like the way Southwest has to operate those linear routes because of the way the airlines is constructed hurts their ability to cancel to the level of demand. Southwest was insulated by virtue of its domestic route structure from what the other carriers had for international exposure. The 3Q will be a tale of the tape. But you can’t just look at the loss as a direct comparison. The loss numbers don’t take in the whole picture.

The international markets were being hit in February for the international carriers. Domestic didn’t see the drastic changes until late March.


This is really simple, show us any data that defends what you are saying. You retort everything based on conjecture.
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:00 pm

airzona11 wrote:
mcdu wrote:
[twoid][/twoid]
jetwet1 wrote:

AA -$2.2B
UA -$2.1B
DL -$607M

WN -$144M

So I would say they are performing better in the P/L category


That was a quarterly earnings. Much like the way Southwest has to operate those linear routes because of the way the airlines is constructed hurts their ability to cancel to the level of demand. Southwest was insulated by virtue of its domestic route structure from what the other carriers had for international exposure. The 3Q will be a tale of the tape. But you can’t just look at the loss as a direct comparison. The loss numbers don’t take in the whole picture.

The international markets were being hit in February for the international carriers. Domestic didn’t see the drastic changes until late March.


This is really simple, show us any data that defends what you are saying. You retort everything based on conjecture.


How much did WN pull down their Asian markets in February due to the C19 outbreak in China? How much did they pull down Europe and South America in early March?

Perhaps you are correct and WN is not losing any money and things are great. Gary Kelly doesn't seem to share that sentiment but what does he know as the CEO?
 
airzona11
Posts: 1755
Joined: Wed Dec 17, 2014 5:44 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:09 pm

mcdu wrote:
airzona11 wrote:
mcdu wrote:
[twoid][/twoid]

That was a quarterly earnings. Much like the way Southwest has to operate those linear routes because of the way the airlines is constructed hurts their ability to cancel to the level of demand. Southwest was insulated by virtue of its domestic route structure from what the other carriers had for international exposure. The 3Q will be a tale of the tape. But you can’t just look at the loss as a direct comparison. The loss numbers don’t take in the whole picture.

The international markets were being hit in February for the international carriers. Domestic didn’t see the drastic changes until late March.


This is really simple, show us any data that defends what you are saying. You retort everything based on conjecture.


How much did WN pull down their Asian markets in February due to the C19 outbreak in China? How much did they pull down Europe and South America in early March?

Perhaps you are correct and WN is not losing any money and things are great. Gary Kelly doesn't seem to share that sentiment but what does he know as the CEO?


Someone else help me what I am missing. Southwest's business model did not have exposure to international (this is another positive of their model), are you saying their model is advantageous during Covid? I interpreted your initial hypothesis as being critical of WNs model.
 
Flflyer83
Posts: 69
Joined: Tue Apr 14, 2020 4:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:10 pm

mcdu wrote:
airzona11 wrote:
mcdu wrote:
[twoid][/twoid]

That was a quarterly earnings. Much like the way Southwest has to operate those linear routes because of the way the airlines is constructed hurts their ability to cancel to the level of demand. Southwest was insulated by virtue of its domestic route structure from what the other carriers had for international exposure. The 3Q will be a tale of the tape. But you can’t just look at the loss as a direct comparison. The loss numbers don’t take in the whole picture.

The international markets were being hit in February for the international carriers. Domestic didn’t see the drastic changes until late March.


This is really simple, show us any data that defends what you are saying. You retort everything based on conjecture.


How much did WN pull down their Asian markets in February due to the C19 outbreak in China? How much did they pull down Europe and South America in early March?

Perhaps you are correct and WN is not losing any money and things are great. Gary Kelly doesn't seem to share that sentiment but what does he know as the CEO?


This is a post about WN, why do you keep brining up other airlines? If you want to discuss those airlines, start a thread for them. /s
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:16 pm

Polot wrote:
Flflyer83 wrote:
mcdu wrote:


Why is WN flying single digit passenger flights? The other carriers are matching flights to demand and WN is wasting a lot of money flying empty planes.

One of my friends just rode them and there were 9 people on the flight to FL. The crew told him that was the most passengers they had in 3 days.



A friend of mine is a a319/20/21 pilot for AA and he’s usually on the 321 and hasn’t had more than 20 passengers in weeks if we’re using anecdotal evidence as to performance.

MCDU’s statement is very odd as it implies that the US legacies/hub airlines are matching aircraft size with demand and flying around generally full planes.

When in reality just like WN they are currently flying mostly air with often times single digit load factors. Demand is nil at the moment. Even 50 seaters are too large to match demand for most routes, and of course the majors don’t actually operate those, they farm them out.


All airlines are flying minimal load factors. However the other carriers are paring their schedules to the bare minimums to reduce cash burn rates. It appears WN is not doing the same. Flying a lot of empty ASM's; it has been attributed to their linear network in more than one news article.

The argument I have been making and has been made by others is that WN is restricted in the amount of flights they can cut due to the way the airline operates without a true hub and spoke network. Does operating flights that you would prefer to cut due to demand but can't due to routing issues make financial sense?
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:21 pm

airzona11 wrote:
mcdu wrote:
airzona11 wrote:

This is really simple, show us any data that defends what you are saying. You retort everything based on conjecture.


How much did WN pull down their Asian markets in February due to the C19 outbreak in China? How much did they pull down Europe and South America in early March?

Perhaps you are correct and WN is not losing any money and things are great. Gary Kelly doesn't seem to share that sentiment but what does he know as the CEO?


Someone else help me what I am missing. Southwest's business model did not have exposure to international (this is another positive of their model), are you saying their model is advantageous during Covid? I interpreted your initial hypothesis as being critical of WNs model.



Yes if you read the posts I have made. WN has benefited from some of the COVID issues due to their business model. Initially they were insulated from the major international disruptions felt by the other carriers. When it finally impacted the domestic markets it affects WN differently than the other carriers than the hub and spoke airlines. I see that as "worse" but if you like you can refer to it as "different".
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:24 pm

Flflyer83 wrote:
mcdu wrote:
airzona11 wrote:

This is really simple, show us any data that defends what you are saying. You retort everything based on conjecture.


How much did WN pull down their Asian markets in February due to the C19 outbreak in China? How much did they pull down Europe and South America in early March?

Perhaps you are correct and WN is not losing any money and things are great. Gary Kelly doesn't seem to share that sentiment but what does he know as the CEO?


This is a post about WN, why do you keep brining up other airlines? If you want to discuss those airlines, start a thread for them. /s


I am sorry you must have missed the comparison that was given by another user showing all of the airlines losses. I was replying to the request by the poster to support my argument. If you like you can go back and take a peak at those posts and it might make it clearer to you.

I am still curious as to what actions were required to the WN network in February and early March that would have affected Q1 results?
 
Flflyer83
Posts: 69
Joined: Tue Apr 14, 2020 4:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:30 pm

mcdu wrote:
Flflyer83 wrote:
mcdu wrote:

How much did WN pull down their Asian markets in February due to the C19 outbreak in China? How much did they pull down Europe and South America in early March?

Perhaps you are correct and WN is not losing any money and things are great. Gary Kelly doesn't seem to share that sentiment but what does he know as the CEO?


This is a post about WN, why do you keep brining up other airlines? If you want to discuss those airlines, start a thread for them. /s


I am sorry you must have missed the comparison that was given by another user showing all of the airlines losses. I was replying to the request by the poster to support my argument. If you like you can go back and take a peak at those posts and it might make it clearer to you.

I am still curious as to what actions were required to the WN network in February and early March that would have affected Q1 results?


Since Q1 results for all airlines are heavily dependent on spring break travel, in March, as the period between holiday travel and spring break is one of the slower periods, the affects on travel in March would have a much larger than affect on Q1 results than anything in January and February due to seasonally lower demand in both business and leisure travel.
 
Flflyer83
Posts: 69
Joined: Tue Apr 14, 2020 4:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:31 pm

https://www.wtae.com/article/forest-hil ... g/32293522

Passenger concerned because they weren’t able to social distance themselves enough to their liking... due to a “full flight”.
 
737MAX7
Posts: 145
Joined: Mon Nov 13, 2017 7:26 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 4:42 pm

We are sending out bulked out -700’s and mostly full -800s with freight at my station. The freight is at least semi helping these empty flights.
 
mcdu
Posts: 1626
Joined: Thu Apr 28, 2005 5:23 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 5:10 pm

Flflyer83 wrote:
https://www.wtae.com/article/forest-hills-man-alarmed-by-full-flight-on-southwest-airlines-claims-no-social-distancing/32293522

Passenger concerned because they weren’t able to social distance themselves enough to their liking... due to a “full flight”.


That’s great. Good to see WN taking measures to consolidate flights. Would hate to see them disappear.
 
User avatar
FiscAutTecGarte
Posts: 134
Joined: Tue Dec 24, 2019 6:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 5:17 pm

My wife and I have had an extraordinary 2020 so far. Several events involving critically sick, dying parents on both sides of our family, had us crossing the USA multiple times in the months of February/March on somewhat minor routes like TUS-CMH, CMH-ALB, TUS-ALB, TUS-CLT. Sometimes, we flew from one crisis to the next without even returning home. In April, 10 days ago, we flew my mom ALB-CLT, who needed to be assisted by staff (especially with a 3hour layover in BWI) the entire time,

These were unexpected and expensive events in our lives, especially in light of the fact that our work has been effected by COVID (all of the manufacturing plants I work with have had at least 4 weeks of shutdowns Mar-Apr, with allot of projects cancelled). But these trips were necessary...emergencies.... and we never hesitated to put flights, cars, hotels, meals, etc.. on credit cars we knew we couldn't pay-off at the end of the month. Some of them arranged just 10 hours before boarding the planes. We booked flights, cars and hotels with SouthWest exclusively for these critical events.

Southwest, flew these minor flights and provided stellar service, despite not turning a profit... Air service is an essential service, and sometimes it's okay if it's a zero-sum game in the short term during times of crisis. I'm glad Southwest didn't listen to some of you and make drastic cuts... If they did.... we would have not been able to respond to these emergencies and care for our families as quickly as did.

I'm grateful that SouthWest is bucking the trend and maintaining itineraries. It's courageous. Somebody has to keep things moving, because life, and all of it's unforeseen occurrences, isn't standing still.

Sorry, to be providing a personal testimony, but it's important to provide perspective during this crisis. Thank you SouthWest.
learning never stops...

FischAutoTechGarten is the full handle and it reflects my interest. It's abbreviated to fit A.net short usernames.
 
krod031
Posts: 170
Joined: Sat Dec 21, 2013 1:49 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Thu Apr 30, 2020 6:21 pm

mcdu wrote:
Flflyer83 wrote:
https://www.wtae.com/article/forest-hills-man-alarmed-by-full-flight-on-southwest-airlines-claims-no-social-distancing/32293522

Passenger concerned because they weren’t able to social distance themselves enough to their liking... due to a “full flight”.


That’s great. Good to see WN taking measures to consolidate flights. Would hate to see them disappear.



What an absolute shocking response from someone with known southwest hatred, didnt say anything about the girl that complained about the full flight on American.

Anyways. That gentleman and his wife DIDNT have to get on the plane if they didnt feel safe. This pandemic doesnt make you, them, me or ANYBODY entitled, including him. His reason of flying is no more important than the other people on that plane.
 
jetwet1
Posts: 3222
Joined: Thu Jun 14, 2007 4:42 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Fri May 01, 2020 1:49 am

mcdu wrote:
[twoid][/twoid]
jetwet1 wrote:
mcdu wrote:

On what level are you claiming that WN is performing better than?


AA -$2.2B
UA -$2.1B
DL -$607M

WN -$144M

So I would say they are performing better in the P/L category


That was a quarterly earnings. Much like the way Southwest has to operate those linear routes because of the way the airlines is constructed hurts their ability to cancel to the level of demand. Southwest was insulated by virtue of its domestic route structure from what the other carriers had for international exposure. The 3Q will be a tale of the tape. But you can’t just look at the loss as a direct comparison. The loss numbers don’t take in the whole picture.

The international markets were being hit in February for the international carriers. Domestic didn’t see the drastic changes until late March.


It doesn't matter, you asked for something that shows WN is doing better and I gave you an example and right now the reality is, the P/L is all that matters, this shouldn't be a thread trying to pull WN down, we all want ALL airlines to survive, well most, and right now there is nothing more important than the P/L for ANY business, including airlines.
 
ctrabs0114
Posts: 1080
Joined: Mon Oct 09, 2017 8:09 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Fri May 01, 2020 4:17 am

737MAX7 wrote:
We are sending out bulked out -700’s and mostly full -800s with freight at my station. The freight is at least semi helping these empty flights.


I would suspect that WN isn't the only carrier which is leaning on cargo/freight to at least partially mitigate the financial impacts of this pandemic, but that seems to be the forgotten element of these empty flights. Granted, that's not going to help any airline as far as passenger revenue, but if that cargo is "essential" product for "essential" front line employees, that's as critical as getting passengers from Point A to Point B.

FiscAutTecGarte wrote:
My wife and I have had an extraordinary 2020 so far. Several events involving critically sick, dying parents on both sides of our family, had us crossing the USA multiple times in the months of February/March on somewhat minor routes like TUS-CMH, CMH-ALB, TUS-ALB, TUS-CLT. Sometimes, we flew from one crisis to the next without even returning home. In April, 10 days ago, we flew my mom ALB-CLT, who needed to be assisted by staff (especially with a 3hour layover in BWI) the entire time [...]

Southwest, flew these minor flights and provided stellar service, despite not turning a profit... Air service is an essential service, and sometimes it's okay if it's a zero-sum game in the short term during times of crisis. I'm glad Southwest didn't listen to some of you and make drastic cuts... If they did.... we would have not been able to respond to these emergencies and care for our families as quickly as did.

I'm grateful that SouthWest is bucking the trend and maintaining itineraries. It's courageous. Somebody has to keep things moving, because life, and all of it's unforeseen occurrences, isn't standing still.


In a way, the "Show must go on" mentality isn't the worst thing in the world in the airline business. If nothing else, at least WN, while reducing a lot of city pairs, is at least keeping their stations connected, even if that means a plane change on what used to be a non-stop flight. That's not to the other US carriers aren't thinking along the same lines; I'm just responding to specific thoughts on WN on this WN-related thread.
2019: DAL, MCI, PHX, LAS, DFW, SAT, ORD, SLC, SEA, DTW, PHL, MIA, LAX; B73G (WN x3), B738 (WN, AA, DL), A20N (NK), MD83 (AA), B788 (AA x2), CS1 (DL), B739 (DL), B712 (DL), B752 (AA), B763 (AA), B77W (AA), B789 (AA)
Next: TBA
 
Lootess
Posts: 454
Joined: Sun May 13, 2018 6:15 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Fri May 01, 2020 6:35 am

FiscAutTecGarte wrote:
Sorry, to be providing a personal testimony, but it's important to provide perspective during this crisis. Thank you SouthWest.


That's nice, but Southwest is burning $30 million a day in 2Q. Rome is burning, people's well-being and jobs are on-the-line here.
 
User avatar
FiscAutTecGarte
Posts: 134
Joined: Tue Dec 24, 2019 6:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Fri May 01, 2020 3:04 pm

Lootess wrote:
FiscAutTecGarte wrote:
Sorry, to be providing a personal testimony, but it's important to provide perspective during this crisis. Thank you SouthWest.


That's nice, but Southwest is burning $30 million a day in 2Q. Rome is burning, people's well-being and jobs are on-the-line here.


Yeah, they are burning money and that results in necessary transportation being available to us. Nearly every single route being flown in the US is unprofitable now, so should every carrier drop every unprofitable route? SOMEONE has to provide air service.. and I'm glad they are doing it. There will be time to make hay (big profits) when all of this is over. For now, some of these airlines need to stomach a poor operating environment and continue to provide service for those of us that have given them our money for decades.

When the recovery begins, SouthWest will be in a much better position than the others because they've done their best to maintain routes and itineraries.
learning never stops...

FischAutoTechGarten is the full handle and it reflects my interest. It's abbreviated to fit A.net short usernames.
 
AA94
Posts: 752
Joined: Fri Aug 19, 2011 1:37 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Fri May 01, 2020 4:09 pm

FiscAutTecGarte wrote:
Lootess wrote:
FiscAutTecGarte wrote:
Sorry, to be providing a personal testimony, but it's important to provide perspective during this crisis. Thank you SouthWest.


That's nice, but Southwest is burning $30 million a day in 2Q. Rome is burning, people's well-being and jobs are on-the-line here.


Yeah, they are burning money and that results in necessary transportation being available to us. Nearly every single route being flown in the US is unprofitable now, so should every carrier drop every unprofitable route? SOMEONE has to provide air service.. and I'm glad they are doing it. There will be time to make hay (big profits) when all of this is over. For now, some of these airlines need to stomach a poor operating environment and continue to provide service for those of us that have given them our money for decades.

When the recovery begins, SouthWest will be in a much better position than the others because they've done their best to maintain routes and itineraries.


This is faulty logic. Making cuts and preserving liquidity at a time where revenue is virtually zero is self-preservation and good business sense. WN doesn't owe you anything because you've "given them your money for decades." They owe it to their employees to pursue every avenue in the interest of survival, and have a fiduciary duty to their investors to stop the bleeding.
 
ScottB
Posts: 6993
Joined: Fri Jul 28, 2000 1:25 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Fri May 01, 2020 5:25 pm

mcdu wrote:
All airlines are flying minimal load factors. However the other carriers are paring their schedules to the bare minimums to reduce cash burn rates. It appears WN is not doing the same. Flying a lot of empty ASM's; it has been attributed to their linear network in more than one news article.


If you read Gary Kelly's statement from the conference call, they're trying to run their schedule precisely to minimize the cash burn:

rumorboy wrote:
the other thing that we're trying to do here is reach a goal or a milestone of producing a cash profit, just looking at the flight operating costs. So bringing in a little -- while it might appear on the surface that there's too much capacity, that's still cash positive, if you will, even though it may not be enough cash to cover overhead.


They're stuck with many of their costs regardless of whether the flights operate. They still have to pay rents, and they still have to pay employees' salaries and benefits under the terms of the bailout. Most of their variable costs -- the ones they can avoid -- are going to be things like fuel (which has gotten incredibly cheap), maintenance consumables, and landing fees. So basically as long as they get enough in tickets to pay for the jet fuel they're probably better off flying the plane rather than keeping it parked. At their larger airports, their share of the costs will remain regardless of whether they operate 1% of the schedule or 100%. DAL, for example, was budgeted to have expenses in the neighborhood of $130 million for FY 2018-19; Southwest is still going to be on the hook for most of that with 18 flights or 185 flights.

Now... if we go past September 30 without a meaningful improvement in passenger traffic and without the government standing behind airline employee wages, we'd see Southwest making more severe cuts to their schedule.
 
User avatar
FiscAutTecGarte
Posts: 134
Joined: Tue Dec 24, 2019 6:40 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Sat May 02, 2020 3:30 am

AA94 wrote:
FiscAutTecGarte wrote:
Lootess wrote:

That's nice, but Southwest is burning $30 million a day in 2Q. Rome is burning, people's well-being and jobs are on-the-line here.


Yeah, they are burning money and that results in necessary transportation being available to us. Nearly every single route being flown in the US is unprofitable now, so should every carrier drop every unprofitable route? SOMEONE has to provide air service.. and I'm glad they are doing it. There will be time to make hay (big profits) when all of this is over. For now, some of these airlines need to stomach a poor operating environment and continue to provide service for those of us that have given them our money for decades.

When the recovery begins, SouthWest will be in a much better position than the others because they've done their best to maintain routes and itineraries.


This is faulty logic. Making cuts and preserving liquidity at a time where revenue is virtually zero is self-preservation and good business sense. WN doesn't owe you anything because you've "given them your money for decades." They owe it to their employees to pursue every avenue in the interest of survival, and have a fiduciary duty to their investors to stop the bleeding.


uh huh.... yeah.... conducting business is great if it weren't for the damn customers that expect product and service...
to hell with customers and the flying public.... fiduciary responsibility to investors is end all be all.....
sorry... excuse my inanity... i've forgetten my place...
I'll stop responding in this thread.
learning never stops...

FischAutoTechGarten is the full handle and it reflects my interest. It's abbreviated to fit A.net short usernames.
 
frmrCapCadet
Posts: 4246
Joined: Thu May 29, 2008 8:24 pm

Re: Southwest 1Q20 income: ($144 million) before taxes

Sat May 02, 2020 12:03 pm

FATG is making a good point, those who don't see it are missing something topside. The feds are not subsidizing airlines because their stuff doesn't smell, it does so because air travel is an essential business. Feds have not taken over the airlines, i.e., structured a national route system and frequency, but have left that to the individual airlines - but with caveats. Boeing and Airbus cannot totally shut down, restarting could become economically impossible. WN is flying as best they can in order to make a profit sometime in the future.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
jjbiv
Posts: 1247
Joined: Mon Jan 08, 2001 10:58 am

Re: Southwest 1Q20 income: ($144 million) before taxes

Sat May 02, 2020 7:42 pm

One additional benefit of not cutting so deeply now is that it will be much easier for Southwest to "make hay" (and profits) once demand returns. With a strong cash position, this ability can be a key advantage for Southwest in the recovery (especially if Southwest is able to generate enough operating revenue to cover the variable costs of operating flights in the mean time).

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