Southwest Airlines' first-quarter operating revenue declined 17.8 percent year over year to $4.2 billion, and executives expect revenue will be down in the 90 to 95 percent range in the current quarter.
CEO and chairman Gary Kelly said trip cancellations have been slowing from their March peak but "remain at unprecedented levels," and Southwest currently has cut its schedule through July. Its load factor for March was 46.6 percent—compared with 85.7 percent a year prior—and about 20 percent in the second half of March.
Southwest reported a net loss of $94 million for the quarter, compared with a net income of $387 million in the first quarter of 2019.
For May, Southwest projects its load factor will be in the 5 to 10 percent range with capacity down as much as 70 percent year over year. The carrier has no estimations of performance beyond May.
Kelly said Southwest is preparing for a variety of recovery situations, of which it expects to have a clearer picture by July or August.
"We have to be prepared for just about any negative scenario," Kelly said Tuesday in an earnings call. "If we have to radically restructure Southwest Airlines, we will do that, but we have a great product, and I don't think that will be necessary."
While Southwest is likely to burn through $30 million to $35 million per day in May, the carrier "is in a strong liquidity position and is in good shape to weather the near-term demand decline," according to a research note by Cowen analyst Helane Becker.
Kelly said he expected a slow recovery for business travel, but one in which Southwest could eventually pick up marketshare in the long-term, using past recessions as a model. "The recovery [in past downturns] of business travel overall was many years, so Southwest benefited in those recovery scenarios," he said. "Because of our low cost and low fares, we gained share."
Despite the different scenarios the carrier is considering, Kelly said he remained optimistic about the long-term return of air travel demand.
"If we can have the Roaring 20s following the Spanish flu of 1918, which was far worse than what we're experiencing today, there's every reason to have hope and confidence that we can get through this," Kelly said. "But realistically, we can't expect things will be back to normal in six to 12 months."
(Correction, May 4): This report originally included that Southwest is likely to burn through $30 million to $35 million in May; that figure is per day.
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