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tphuang
Topic Author
Posts: 5212
Joined: Tue Mar 14, 2017 2:04 pm

WN Q2 result

Thu Jul 23, 2020 2:11 pm

From here http://www.southwestairlinesinvestorrel ... -113111706
- Total revenue down 82.9%. $1.239 billion loss (does not exclude $784 million from PSP). So if excluding special items, this would probably be closer to $2 billion
- Had $14.5 billion cash at end of June. With $12 billion in unencumbered assets. That's a lot cash.
- Cash burn went from $30 million/day in April to $16 million/day in June. $23 million/day overall in Q2.
- July cash burn is $18 million/day. Estimating Q3 to be close to Q2's $23 million/day
- booking has softened in July and trip cancellations are up.
- Expecting LF of 40 to 45% in July and 30 to 40% in August.
- Revenue estimated to be down 70 to 75% in July while operating 30% less schedule than 2019.
- August revenue estimated to be down 70 to 80% while operating 20% less schedule than 2020.
- Looks like WN intend to keep operating as many flight as possible even if it keeps cash burn up.
 
PANAMsterdam
Posts: 260
Joined: Thu Jun 27, 2019 7:45 am

Re: WN Q2 result

Thu Jul 23, 2020 2:18 pm

Another dramatic loss for a US Airline. But they cut their cash burn almost in half which is a good thing.

tphuang wrote:
- Looks like WN intend to keep operating as many flight as possible even if it keeps cash burn up.


Can anybody tell me why ? 'Stealing' potential customers away from the US3?
Every country has an airline. The world has Pan Am.
 
ATCJesus
Posts: 30
Joined: Tue Aug 27, 2019 3:39 am

Re: WN Q2 result

Thu Jul 23, 2020 2:23 pm

Ya, they have the cash to strong arm the market and be the only airline in certain city pairs. Should allow them to get good market share coming out of the travel recession as other airlines pull out.
 
MrPeanut
Posts: 157
Joined: Fri Nov 23, 2018 8:36 pm

Re: WN Q2 result

Thu Jul 23, 2020 2:36 pm

A bad month for WN for sure, but very interesting to note how much better their cash burn rate is relative to the big 3.
 
alasizon
Posts: 2598
Joined: Sat Apr 28, 2007 8:57 pm

Re: WN Q2 result

Thu Jul 23, 2020 3:11 pm

PANAMsterdam wrote:
Another dramatic loss for a US Airline. But they cut their cash burn almost in half which is a good thing.

tphuang wrote:
- Looks like WN intend to keep operating as many flight as possible even if it keeps cash burn up.


Can anybody tell me why ? 'Stealing' potential customers away from the US3?


Gaining market share is one piece. The other is that WN's network does not do very well routing and scheduling wise once you get below 55-60% capacity since they have so many multi-stop flights. If a flight is routed to go DEN-ABQ-PHX-BUR-SJC-PDX, it isn't as easy to just say you no longer need the PHX stop because you then lose the DEN-PHX pax, the ABQ-PHX pax, the PHX-BUR pax, the PHX-SJC pax and potentially even a few PHX-PDX pax. Sure there are other nonstops and one-stops on all of those routes but if that was the timing that the pax needed they may choose another carrier instead and all they remember is that Southwest couldn't get them there but XYZ could.

The other piece of this is that fuel is most of the cost when it comes to adding flights right now. Pilots and FAs are already getting their min guarantee so if they are able to add flights and have them breakeven or with very minimal expense, it puts them in a better place to absorb any peaks in bookings and make a profit. Sure, a lull in bookings hurts them more then as opposed to those who have fully reduced their schedule but passengers have a memory on who could and couldn't get them where they needed to go and WN is strong on being in the back of people's minds when it comes to booking travel again.
Airport (noun) - A construction site which airplanes tend to frequent
 
ericm2031
Posts: 1398
Joined: Tue Jun 19, 2012 8:46 am

Re: WN Q2 result

Thu Jul 23, 2020 3:36 pm

They also announced no furloughs planned for this year.

Also, wanting to get to zero cash burn by end of year, but 1st quarter more "realistic" target according to GK, but will still try for stretch goal of end of year.
 
mcdu
Posts: 1628
Joined: Thu Apr 28, 2005 5:23 am

Re: WN Q2 result

Thu Jul 23, 2020 4:19 pm

MrPeanut wrote:
A bad month for WN for sure, but very interesting to note how much better their cash burn rate is relative to the big 3.


It wasn’t a month, it was a Quarter. Their lack of international exposure is why their burn rate differs from the US3.

Appears 2020 will be the end of the yearly profit streak for WN.
 
737max8
Posts: 618
Joined: Thu Dec 10, 2015 4:13 am

Re: WN Q2 result

Thu Jul 23, 2020 4:29 pm

Where does OP get his loss numbers?

Second quarter net loss of $915 million
Excluding special items, net loss of $1.5 billion

Compared to:

UA 1.6B/2.6B
AA 2.1B/3.4B
DL 5.7B (but 2B was writing off LATAM and other investments?)
Last edited by 737max8 on Thu Jul 23, 2020 4:57 pm, edited 1 time in total.
The thoughts and opinions expressed in my comments do not represent that of any airline or affiliate.
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PSA1978
Posts: 18
Joined: Tue Dec 01, 2015 9:38 pm

Re: WN Q2 result

Thu Jul 23, 2020 4:50 pm

From a customer perspective, I'm booking WN or Delta as long as they guarantee no middle seat passengers. I don't have to travel at all but when I do, I'm not going on United where I might be on a relatively full flight. Why take a chance when WN is willing to accommodate me and not charge for bags etc. United may now be using larger aircraft to minimize the chance of sitting next to someone but I'm still not going to book them. Congrats to WN for making the best out of the situation and taking advantage of opportunities.
 
MrPeanut
Posts: 157
Joined: Fri Nov 23, 2018 8:36 pm

Re: WN Q2 result

Thu Jul 23, 2020 5:10 pm

mcdu wrote:
MrPeanut wrote:
A bad month for WN for sure, but very interesting to note how much better their cash burn rate is relative to the big 3.


It wasn’t a month, it was a Quarter. Their lack of international exposure is why their burn rate differs from the US3.

Appears 2020 will be the end of the yearly profit streak for WN.


Ooops. Yes, I meant quarter. I hear what you are saying about lack of international exposure, but the Big 3 weren't running many international routes in Q2.
 
737max8
Posts: 618
Joined: Thu Dec 10, 2015 4:13 am

Re: WN Q2 result

Thu Jul 23, 2020 5:14 pm

MrPeanut wrote:
mcdu wrote:
MrPeanut wrote:
A bad month for WN for sure, but very interesting to note how much better their cash burn rate is relative to the big 3.


It wasn’t a month, it was a Quarter. Their lack of international exposure is why their burn rate differs from the US3.

Appears 2020 will be the end of the yearly profit streak for WN.


Ooops. Yes, I meant quarter. I hear what you are saying about lack of international exposure, but the Big 3 weren't running many international routes in Q2.


He will always spin things to make it looks like WN is doing bad, even though they lost billions less than any of the US3.
The thoughts and opinions expressed in my comments do not represent that of any airline or affiliate.
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alasizon
Posts: 2598
Joined: Sat Apr 28, 2007 8:57 pm

Re: WN Q2 result

Thu Jul 23, 2020 5:16 pm

737max8 wrote:
Where does OP get his loss numbers?

Second quarter net loss of $915 million
Excluding special items, net loss of $1.5 billion

Compared to:

UA 1.6B/2.6B
AA 2.1B/3.4B
DL 5.7B (but 2B was writing off LATAM and other investments?)


1.239B was the net loss before taxes
Airport (noun) - A construction site which airplanes tend to frequent
 
F9Animal
Posts: 4424
Joined: Thu Dec 16, 2004 7:13 am

Re: WN Q2 result

Thu Jul 23, 2020 5:31 pm

This is just so depressing. I think we all knew the results were going to be bad. I am confident WN will be okay, and survive this. It's just a temporary mess that will eventually get behind us.
I Am A Different Animal!!
 
panamair
Posts: 4330
Joined: Fri Oct 12, 2001 2:24 am

Re: WN Q2 result

Thu Jul 23, 2020 5:41 pm

MrPeanut wrote:
Ooops. Yes, I meant quarter. I hear what you are saying about lack of international exposure, but the Big 3 weren't running many international routes in Q2.


Looking back at Delta's Q2 earnings call transcript, they did break out their cash burn of $27m/day in June to be $17m domestic and $10m international, so domestic was pretty close to WN's $16m/day in June.
 
kiowa
Posts: 750
Joined: Wed Jun 08, 2011 12:37 am

Re: WN Q2 result

Thu Jul 23, 2020 5:51 pm

F9Animal wrote:
This is just so depressing. I think we all knew the results were going to be bad. I am confident WN will be okay, and survive this. It's just a temporary mess that will eventually get behind us.



It is quite depressing indeed and I am not at all confident of any specific airline being OK. They are all gambling on travel coming back at various times. Bleeding to the bottom is not always a good strategy if travel takes a long time to recover.
 
FlyingElvii
Posts: 881
Joined: Wed Dec 27, 2017 10:53 pm

Re: WN Q2 result

Thu Jul 23, 2020 6:05 pm

kiowa wrote:
F9Animal wrote:
This is just so depressing. I think we all knew the results were going to be bad. I am confident WN will be okay, and survive this. It's just a temporary mess that will eventually get behind us.



It is quite depressing indeed and I am not at all confident of any specific airline being OK. They are all gambling on travel coming back at various times. Bleeding to the bottom is not always a good strategy if travel takes a long time to recover.

Cargo carriers, EAS carriers, and the 135’s are doing fine. The end of the pilot shortage can only help them.
Depending on who is doing the talking, private jet charters are only Down 15%-30%, compared to down 70-80% for the mainlines.

Anecdotally, the local FBO’s in this area have seen an uptick in local charters like a Cirrus. Biz travelers that must go, are finding ways to avoid the big airports. Expect that trend to continue until the big meetings, conventions, and events come back.
 
WaywardMemphian
Posts: 1497
Joined: Sat Dec 13, 2014 9:05 pm

Re: WN Q2 result

Thu Jul 23, 2020 6:37 pm

PANAMsterdam wrote:
Another dramatic loss for a US Airline. But they cut their cash burn almost in half which is a good thing.

tphuang wrote:
- Looks like WN intend to keep operating as many flight as possible even if it keeps cash burn up.


Can anybody tell me why ? 'Stealing' potential customers away from the US3?


Yep, In these times folks want the most direct and shortest flight they can get, Delta and United have led the way in removing that. Less time on plane and in an airport = reduced exposure.
 
airzona11
Posts: 1755
Joined: Wed Dec 17, 2014 5:44 am

Re: WN Q2 result

Thu Jul 23, 2020 9:12 pm

Free Euro-style business class on all seats through September is awesome. What a crazy time. Cash is king.
 
jayunited
Posts: 2873
Joined: Sat Jan 05, 2013 12:03 am

Re: WN Q2 result

Thu Jul 23, 2020 10:19 pm

MrPeanut wrote:
A bad month for WN for sure, but very interesting to note how much better their cash burn rate is relative to the big 3.



I'm not sure I agree with your statement. Heading into Q2 both AA and UA had a daily cash burn rate over $100 million dollars, and DL's burn rate was somewhere around $95-90 million per day. Every single one of the US3 got their burn rate averages down in Q2, AA averaged $55 million, DL averaged $43 million, and UA averaged $40 million. Given the US3 relative size and over all exposure I think the US3 did a great job getting their burn rate averages down in Q2. The two things WN have in the favor is their $12 billion dollars in unencumbered assests and the amount of debt they have is low relatively speaking when compared to the US3. Those are huge advantages which allowed WN to be a lot more agressive in Q2 and it also allows them fly more of their pre-COVID schedule than any other competitor in the US.

What I find amazing is they expect their July revenue to be down 70%-75% yet they are operating around 70% of their pre-COVID schedule. While other airlines have trimmed their August schedule because the recovery has stalled WN's plan is to operated nearly 80% of their pre-COVID schedule even though they are expect revenue to do down 70%-80%. Out of all the US carriers WN is showing everybody who the real boss is in this situation, they are in the best financial position of any US carrier in business today.

Outside of something drastic I think WN could be the only carrier to avoid involuntary furloughs they have a really good shot at maintaining their streak.
 
Flflyer83
Posts: 69
Joined: Tue Apr 14, 2020 4:40 pm

Re: WN Q2 result

Thu Jul 23, 2020 10:45 pm

airzona11 wrote:
Free Euro-style business class on all seats through September is awesome. What a crazy time. Cash is king.


As of today, through at least the end of October.
 
freakyrat
Posts: 2021
Joined: Fri Aug 22, 2008 1:04 pm

Re: WN Q2 result

Thu Jul 23, 2020 11:18 pm

tphuang wrote:
From here http://www.southwestairlinesinvestorrel ... -113111706
- Total revenue down 82.9%. $1.239 billion loss (does not exclude $784 million from PSP). So if excluding special items, this would probably be closer to $2 billion
- Had $14.5 billion cash at end of June. With $12 billion in unencumbered assets. That's a lot cash.
- Cash burn went from $30 million/day in April to $16 million/day in June. $23 million/day overall in Q2.
- July cash burn is $18 million/day. Estimating Q3 to be close to Q2's $23 million/day
- booking has softened in July and trip cancellations are up.
- Expecting LF of 40 to 45% in July and 30 to 40% in August.
- Revenue estimated to be down 70 to 75% in July while operating 30% less schedule than 2019.
- August revenue estimated to be down 70 to 80% while operating 20% less schedule than 2020.
- Looks like WN intend to keep operating as many flight as possible even if it keeps cash burn up.


If we can get this virus sorta under control where people aren't afraid to go to Florida or Vegas maybe people would fly a litte bit more. Also some people have not returned to their jobs yet. As far as the virus goes, 14day Quarantines at MDW and in the NYC area are not helping either.
 
ScottB
Posts: 6993
Joined: Fri Jul 28, 2000 1:25 am

Re: WN Q2 result

Thu Jul 23, 2020 11:28 pm

panamair wrote:
Looking back at Delta's Q2 earnings call transcript, they did break out their cash burn of $27m/day in June to be $17m domestic and $10m international, so domestic was pretty close to WN's $16m/day in June.


What's stunning to me is that WN's passenger revenue of $704 million for Q2 was a bit larger than DL's passenger revenue of $678 million. I don't think I would have ever predicted that happening, but these are unprecedented times.
 
tphuang
Topic Author
Posts: 5212
Joined: Tue Mar 14, 2017 2:04 pm

Re: WN Q2 result

Thu Jul 23, 2020 11:46 pm

jayunited wrote:
MrPeanut wrote:
A bad month for WN for sure, but very interesting to note how much better their cash burn rate is relative to the big 3.



I'm not sure I agree with your statement. Heading into Q2 both AA and UA had a daily cash burn rate over $100 million dollars, and DL's burn rate was somewhere around $95-90 million per day. Every single one of the US3 got their burn rate averages down in Q2, AA averaged $55 million, DL averaged $43 million, and UA averaged $40 million. Given the US3 relative size and over all exposure I think the US3 did a great job getting their burn rate averages down in Q2. The two things WN have in the favor is their $12 billion dollars in unencumbered assests and the amount of debt they have is low relatively speaking when compared to the US3. Those are huge advantages which allowed WN to be a lot more agressive in Q2 and it also allows them fly more of their pre-COVID schedule than any other competitor in the US.

What I find amazing is they expect their July revenue to be down 70%-75% yet they are operating around 70% of their pre-COVID schedule. While other airlines have trimmed their August schedule because the recovery has stalled WN's plan is to operated nearly 80% of their pre-COVID schedule even though they are expect r
evenue to do down 70%-80%. Out of all the US carriers WN is showing everybody who the real boss is in this situation, they are in the best financial position of any US carrier in business today.

Outside of something drastic I think WN could be the only carrier to avoid involuntary furloughs they have a really good shot at maintaining their streak.


you are right. In times of this, WN's balance sheet makes this almost unfair. They can keep operating a schedule that any other large carrier would be insane to operate.

To me, WN really hasn't made that much of an effort to cut their costs compared to US3.

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