Southwest Airlines to Revamp Flight Schedule as Consumer Travel Changes
The carrier said it will pull back from some short-haul markets and trim early-morning and late-night flights next year Southwest says resilient demand, especially for leisure travel, has held up in July. Photo: Kiichiro Sato/Associated Press By Alison Sider Updated July 27, 2023 9:11 am ET Southwest Airlines plans to revamp its flight schedule next year to better reflect what it says are changing travel patterns as it reported the impact of rising labor costs on its second-quarter profit. The carrier’s shares fell nearly 6% in premarket training. The airline said demand for vacation travel remains robust this summer. The carrier reported record operating revenue of $7 billion during the second quarter. However, Chief Executive Bob Jordan
Southwest says resilient demand, especially for leisure travel, has held up in July.
Photo: Kiichiro Sato/Associated Press
Southwest Airlines plans to revamp its flight schedule next year to better reflect what it says are changing travel patterns as it reported the impact of rising labor costs on its second-quarter profit.
The carrier’s shares fell nearly 6% in premarket training.
The airline said demand for vacation travel remains robust this summer. The carrier reported record operating revenue of $7 billion during the second quarter.
However, Chief Executive Bob Jordan said business travel’s recovery to prepandemic levels remains elusive, and the airline plans to revamp its flight schedule next year to adapt.
Among the changes, Southwest will fly less on Tuesdays, pull back from some short-haul markets and trim early-morning and late-night flights, Jordan told CNBC.
Consumers’ appetite for travel has roared back in the last two years as pandemic-era restrictions began to fall away, and airline executives have reported soaring demand.
Southwest passengers check in at the airport in Milwaukee.
Photo: Mark Hertzberg/Zuma Press
Business travel hasn’t fully bounced back. Leisure travel and trips that blur the lines between leisure and business are taking on new importance for airlines.
There are some indications that domestic demand has cooled off as more travelers have looked abroad, something analysts say could pose a challenge for airlines like Southwest with less exposure to far-flung locales.
Southwest said that resilient demand, especially for leisure travel, has held up in July.
Southwest said it expects the third quarter to bring another revenue record, but it said that revenue per seat flown a mile could be as much as 7% lower than in the same period in 2022.
The airline said it is tough to live up to last year when pent-up demand for travel was first unleashed.
Alaska Airlines, another primarily domestic leisure carrier, said this week that ravenous appetite for international travel has diverted some would-be domestic travelers, something that has been a drag on domestic fares. Alaska’s shares also sold off sharply after it reported earnings on Tuesday.
Southwest reported a profit of $683 million in the three months ended June 30, down about 10% from the same period a year earlier.
The airline said its nonfuel unit costs were up 7.5% from a year earlier—on the high end of what it had expected—due to expected wage increases in labor contracts the airline is hammering out. The airline said it expects rising wages to continue to pressure costs.
Pilots at rival airlines have struck deals for big pay bumps in recent months and Southwest said it is adjusting to the “dynamic market environment” as it plans for the expected impact of new contracts.
Southwest is in the midst of negotiations with its pilots and flight attendants. Its pilots have asked to be released from federal mediation, saying talks have reached an impasse, a move that brings them one step closer to a potential strike.
The airline’s adjusted profit of $1.09 per diluted share was in line with analysts’ forecasts.
Write to Alison Sider at [email protected]
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