A month after saying he needed an infusion of bookings through the summer to avoid layoffs, Southwest Airlines CEO Gary Kelly now says he needs business to double if the carrier wants to break even.
“The bottom line result is terrible,” Kelly said in a video shared with Southwest employees, according to the Dallas Morning News. “We’ve got to find a way to eliminate these huge cash losses and just get to the other side of this pandemic. … Passenger demand remains inconsistent and difficult to forecast and still at very depressed levels.”
Still, Kelly maintains his claim about avoiding layoffs through the end of the year, but beyond that depends on the recovery of the airline industry. Almost 30 percent of Southwest Airlines employees took buyouts early retirement, but the Morning News noted that the carrier is burning through $17 million of cash a day and expects to burn through $20 million a day during the third quarter. It does have $15 billion in reserve.
Air travel is still off about 75 percent compared to last year according to the Transportation Security Administration, and Kelly isn’t expecting a strong rebound from business travel as the summer comes to an end in another week or so.
“Historically, September is a heavier business travel month after Labor Day,” Kelly said. “And we still haven’t seen much activity from our business travelers, of course.”
Kelly said the company recently cut schedules for August, September and October.
“It’s welcomed progress, but we’ll need our business to double in order to break even,” he said.
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