Southwest CEO says June looking worse than May

June is a key month for the airlines and if June is worse then May (May was a blood bath) you can kiss the busy summer travel season goodbye. Many sources are indicating a bad 4th quarter of 09 and a weak 1st quarter for 2010 as well.

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Southwest CEO says June looking worse than May
Southwest Airlines CEO says June traffic looking weaker than May, no sign of turnaround
David Koenig, AP Airlines Writer
On Thursday June 11, 2009, 5:00 pm EDT

DALLAS (AP) -- The chief executive of Southwest Airlines said Thursday that June looks weaker than May, judging by a key measure of revenue, and he doesn't yet see signs of a turnaround.

"It's a very, very difficult time, and earnings are going to be very stressed until the economy changes," CEO Gary Kelly said.

Kelly said that revenue divided by capacity, a key measure of financial performance in the airline business, was weaker so far in June than in May, when unit revenue fell about 9 percent from a year earlier.

Business travel remains weak, which is cutting into the number of last-minute, full-fare tickets and traffic on shorter routes, Kelly said at an investor conference in New York.

Southwest is responding by cutting unprofitable flights, adding fees for unaccompanied minors and pets, and offering incentives for employees to leave the airline.

The Dallas-based airline plans to shrink capacity by about 6 percent for all of 2009, although reductions so far this year have been smaller -- suggesting that deeper cuts are ahead.

Kelly said airlines must make schedule decisions far in advance, not knowing what the economy will bring. Southwest will soon publish its schedule for flights beginning in November.

"No one at this conference can tell anybody what business is going to be like on Nov. 1," he said, adding that "there is no clear evidence" yet of improvement in the economy.

"I think it is crazy to assume and bet on things improving anytime soon," he said.

Southwest has lost money the past three quarters and it now grappling with industrywide weakness in traffic.

Kelly said Southwest is in better financial shape, with about $2.3 billion in unrestricted cash, than it was entering the 1991 recession, the last time the low-fare carrier lost money.

Southwest officials say that the weak economy will help them attract travelers looking for low fares. But rivals are imitating Southwest's longtime strategy, even with a smaller supply of airline seats than existed just a year ago.

"We're continuing to run fare sales," Kelly said. "Our competitors, even if we don't want (them) to run fare sales, our competitors have a plethora of low fares out there in virtually all of our markets."

Shares of Southwest fell a penny to close at $6.64 in trading Thursday.

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I know things would be in the toilet anyway, but the President's singling out of one of WN's key destinations, Las Vegas, as banned territory for corporate travel, probably didn't help them any.

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Originally Posted by GothamSpotter

I know things would be in the toilet anyway, but the President's singling out of one of WN's key destinations, Las Vegas, as banned territory for corporate travel, probably didn't help them any.

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What happened Matt? Not sure I understand what your saying about banned territory.

Back around the time of the corporate jet brouhaha he said something about how companies should not be spending money to go to Las Vegas for conferences, retreats, etc. Local businesses and pols, even Harry Reid, were none to pleased about it. He was really directing it at the AIG's and Citigroups of the world, but I think there's a good chance a number of businesses that had nothing to do with the mess we're in curtailed their travel just to keep up appearances after the president said that, or at least chose less high-profile destinations than Vegas.

Except that lots of very large conferences are booked years in advance, so a public shaming now would have little effect. There's a decent chance I'll be attending 2 very large trade shows in 2011. I already know the dates and venues.

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Originally Posted by GothamSpotter

Back around the time of the corporate jet brouhaha he said something about how companies should not be spending money to go to Las Vegas for conferences, retreats, etc. Local businesses and pols, even Harry Reid, were none to pleased about it. He was really directing it at the AIG's and Citigroups of the world, but I think there's a good chance a number of businesses that had nothing to do with the mess we're in curtailed their travel just to keep up appearances after the president said that, or at least chose less high-profile destinations than Vegas.

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Great way to put another torpedo in their economy.....

...and thats the story of SWA.

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Originally Posted by jetblue187

...and thats the story of SWA.

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What are you trying to say? This makes no sense?