October 22, 2020

Southwest’s Busy Day: Q3 Earnings Report, Two New Destinations, Middle Seats are Back

1 Southwest Airlines led off a busy Thursday by releasing its Q3 earnings, and they don’t LUV it. The airline reported a net loss of $1.2 billion for the three months ending September 30. The loss comes on operating revenues of $1.8 billion, a 68.2% drop from Q3 in 2019.

Load factors for Q3 peaked in September at 51.5%, but were still down nearly 40% for the entire quarter compared to last year. The airline wraps up the quarter with $10.9 billion in outstanding debt and liquidity of $15.6 billion.

Also in the earnings report, Southwest revealed it is returning to one previous destination and adding two new locations to its route map. The airline announced its intention to begin service in the first half of 2021 to both Savannah/Hilton Head (SAV) and Colorado Springs (COS), while resuming service to Jackson, MS (JAN).

Lastly, but most notable to passengers, the airline casually slipped in an update that it will be filling its airplanes to full capacity beginning December 1. Citing recent studies from Boeing and the federal government showing commercial aircraft to be as safe as can be during the pandemic, Southwest will no longer block middle seats starting with the holiday travel season. This is great news for anyone looking for extra incentive to skip out on that trip to the relatives; just send a link to Southwest’s press release and call it a day.


American’s Q3 Finances Aren’t AAmazing

2 American Airlines joined the earnings release party today, announcing its third quarter revenue reached $3.2 billion which seems like a good thing, until you see that that figure is down 73% from Q3 in 2019, and it comes on a net loss of $2.4 billion for the quarter.

In effort to bolster its liquidity, AA finalized a $5.5 billion loan from the CARES Act, and increased its loan capacity to $7.5 billion earlier this month. It reduced its daily cash burn to $44 million a day with an expectation to reduce it further to $25-30 million per day in Q4. 

The airline also announced a cost-saving move to consolidate its fleet by retiring all 15 of its A330-200 aircraft, effective immediately. By immediately, we assume that any planes flying when the decision was made were permitted to safely land and deplane its passengers before retirement, but when it comes to AA and cost-cutting, one really never knows. 

The decision comes about six months after AA revealed it would be retiring its fleet of nine A330-300’s, leaving the airline without any A330’s in service. The aircraft came to AA via its merger with US Airways which began operating the plane around 2000. The planes will be sent to the desert for the time being, but are available for purchase from the airline for interested buyers. A coupon for $99 off any aircraft purchase of $2 million or more can be found in the back of November’s American Way magazine.


Free Spirit: Spirit Unveils New Frequent Flier Program, Few Notice or Care

3 Spirit Airlines announced the details of its new Frequent Flier Program that will debut on January 21. The new Free Spirit will switch to a revenue-based model and come with surprisingly attainable status levels with actual benefits — a change from how the airline has operated previously.

Miles will become points — Status Qualifying Points (SQP) to be exact. Non-elite members will earn 6 SQP for every dollar spent on airfare and 12 SQP spent on what Spirit calls “extras,” but what most airlines consider basic inclusions in the fare. So bag fees, seat assignment fees and other Spirit “add-ons” will accumulate at double the rate of airfare.

Spirit Silver members, who accumulate 2,000 SQPs in a year will earn at a rate of 8x and 16x, respectively, while Gold members, the highest tier in the new program will earn at 10x and 20x. It takes 5,000 SQP annually to become a Gold member in addition to proof of membership in a Sadism club.

The benefits aren’t bad — Silver members can enjoy free seat selection at check-in, free same-day standby and more. Gold members can even carry on a free bag, receive a first checked bag for fee and nosh on a free snack and drink while on-board. It’s possible this is the first time the word “free” was written this many times in a paragraph about Spirit Airlines — 2020 really is the year where anything can happen.


Alaska’s Q3 Earnings Report Also Isn’t Great

4 Alaska Airlines also released its Q3 earnings report on Thursday and the airline showed a net loss of $431 million compared to $322 million income last year.

Alaska closed the quarter with $1.7 billion in debt, a number flat from where the carrier ended 2019. It’s debt-to-capitalization ratio is 59% including short-term borrowing due to the pandemic.

Alaska announced in its report that it would extend its blocking of middle seats through January 6, matching Delta in the regard. After Southwest’s announcement today that it will end middle seat blocking on December 1, Alaska and Delta will be the final two airlines continuing to block the middle.

Alaska closes the quarter with $3.8 billion in unrestricted cash, half of which is earmarked for deicing fluid during the winter for its expanded operation in Alaska.


Virgin Australia Announces Shady Travel Credit Scheme

5 Virgin Australia is rolling out its new travel credits, and has given them the clever name “Future Flight Credits.” These credits can be used to make a booking on the airline through June 2023. Some find it optimistic that the airline still plans to be around by then.

Customers who held bookings on Virgin Australia or Tigerair flights that were cancelled due to the pandemic will see their travel credits turned into Future Flight Credit. The credit can then be booked for travel booked on any Virgin Australia fight.

Well, any Virgin Australia flight besides one operated by Alliance Airlines, Singapore or Etihad. Also Virgin has limited seats available for use with Future Flight Credits on each flight, meaning there’s no guarantee a seat will be available on the flight you want using your credit. The credits are also available in any fare, except don’t even think about using them for full-fare business.

Other than that, these credits (AKA money you gave the airline for a flight that said airline previously cancelled) are available for any flight on the airline. Clear as mud, right? Good luck!


Airline Potpourri

  • Air Asia received a $72 million loan which will be enough to keep the airline operating for the foreseeable future.
  • Airlink has signed an interline agreement with Emirates.
  • ANA will allow its customers to redeem frequent flier miles on its budget-carrier, Peach. 
  • Emirates will return to full inflight dining aboard its aircraft on November 1.
  • IAG released its Q3 earnings with total revenue declining 83% to just €1.2 billion compared to €7.3 billion a year ago. The group totaled a Q3 loss of €1.3 billion.
  • Silver, which announced expansion into Charleston, SC, last week is continuing its move into the state, adding service in Columbia (CAE). It will start with 2x-weekly service to three Florida destinations – Fort Lauderdale, Orlando and Tampa – with service beginning on November 22.

Andrew’s Moment of Levity

In the word scent, is it the s or the c that’s silent?