Southwest stocks climb on signs of improving demand

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Ground operations workers load luggage onto a Southwest Airlines Boeing 737 on the tarmac at John Wayne Airport (SNA) in Santa Ana, California.

Patrick T. Fallon | Bloomberg | Getty Images

Southwest Airlines said on Tuesday that new bookings exceeded cancellations, a turning point in the coronavirus pandemic that has devastated demand for air travel.

Dallas-based carrier says May operating revenues are unlikely to decrease by more than 90% year over year, compared to previous estimate down 95% from May 2019 He added that he was seeing “modest improvement” in demand and reservations for June 2020. Even with the slight increase, she expects operating revenue next month to be 80% at 85% lower than last year.

The increase is also evident at airports, but demand is still far from last year’s levels for this time of year, when it generally increases. In the first 18 days of May, 3,419,717 people passed security checkpoints at US airports, according to the Transportation Security Administration, down 92% from a year ago, but better than the last month. The first 18 days of April showed a drop of more than 95% over the year, according to TSA data.

Southwest is expected to cut capacity by up to 55% next month starting in June 2019 and said that, even with this reduction, it expects planes to be no more than 45% full. Its shares rose 2% in morning trading.

“The revenue environment remains uncertain and may require further capacity reductions depending on passenger demand,” he said in a brief.

United, for its part, said on Tuesday that it had experienced “moderate improvement in demand” for travel to the United States and certain international destinations the rest of the second quarter. The airline reduced its capacity by 75% in July compared to a year ago, against a reduction of 90% over twelve months planned for May and June.

United “plans to continue to proactively assess and cancel flights on a continuous 60-day basis until it sees signs of recovery in demand.”

He also plans to cut capital spending by more than half to around $ 2 billion next year. United’s actions have changed little in the morning trade.

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