Southwest CEO Gary Kelly returning from business trip after coronavirus

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Southwest CEO Gary Kelly told CNBC on Thursday that the airline is focusing its operations on leisure travel, citing the difficulty of predicting when business travel will rebound for good after the coronavirus pandemic.Kelly, appearing on “Squawk on the Street,” said it typically takes about five years for business travel to start growing again after recessions. “You think it will at least be the case now,” he added. “And I’ve said it before, it may be 10 years before business travel resumes. I do not know. ”

“But we’re going to be prepared to rely more on consumer travel, and we’ll do well in that environment,” Kelly said, shortly after the airline reported its largest quarterly loss of $ 1.2 billion then. as the pandemic continues to decline. request.

Southwest’s third-quarter operating revenue of $ 1.8 billion was a 68% decline from a year ago. However, his daily cash consumption of about $ 16 million during the period was an improvement from about $ 23 million per day in the second quarter.

Southwestern stocks rose nearly 5% on Thursday.

The Covid-19 crisis devastated the airline industry, which lobbied Congress for more financial aid to protect jobs. While air travel has broadly recovered from its April nadir, business travel has not returned to the same pace as leisure travelers. This has ramifications for businesses, as business travelers accounted for 50% of U.S. carrier revenue on just 30% of travel before the pandemic, according to industry group Airlines for America.

Business meetings have now been conducted via videoconference for months, instead of in-person visits that required employee flights. As a result, questions have been raised about companies’ willingness to return to previous travel levels as the coronavirus remains a threat.

Kelly, for his part, said he believes the apocalyptic predictions are unlikely to materialize. “My opinion is that that too will pass. Just like September 11, everyone said the world was going to change, that people were not going to steal. They were wrong, ”he said.

“I think there is a need for business people to travel and I think it will get back to ‘normal’ at some point. I bet you it’s a long time away, ”he said. ” But that’s just my opinion. What we need to predict is different. … We have to manage this risk, so we have to assume that we will be more dependent on consumers in terms of demand in the future. . ”

One way to do this is to adjust its routing system to be more suitable for the flights leisure travelers would take, Kelly said. He also said that means, “We have to keep our costs low. We need to keep our prices low. ”

While this is the short-term strategy, Kelly said there is a possibility that the company’s business travel forecast may turn out to be incorrect and return earlier than expected. ” Very good. It’s just an added benefit. We will buy more planes and we will be happy, ”he said.

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