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Southwest Sees Clearer Skies After Coronavirus Storm

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Southwest Airlines  (LUV) - Get Southwest Airlines Company Report has not been immune to the unprecedented hit the air travel industry has taken as a result of the coronavirus pandemic, but the Dallas-based airline offered up a glimpse of slightly clearer skies ahead on Tuesday.

Indeed, in a Securities and Exchange Commission filing, the airline said that while operating revenue for April fell 90% to 95% and load factor was about 8% as a result of the pandemic it experienced "modest improvement" in passenger demand, bookings and trip cancellations in May, resulting in net positive bookings through May 18.

And while May operating revenue is expected to fall 85% to 90% and load factor to be 25% to 30%, compared with previous expectations for a 90%-to-95% decline in operating revenue and load factor of 5% to 10%, it sees light at the end of the runway.

For June, Southwest currently expects improvement in operating revenue to a decline of 80% to 85% and in load factor to 35% to 45%. It also said it expects its daily cash burn rate to be “in the low-$20 million range,” an improvement from March and April. 

On the cash-burn front, Southwest said it continues to estimate its average daily core cash spending to be in the range of $30 million to $35 million in the second quarter of 2020. It currently has cash and short-term investments of roughly $13 billion. 

Since the beginning of 2020, the company has raised approximately $13.9 billion, including $10 billion in financings and sale-leaseback transactions, $2.2 billion through a common stock offering, and $1.6 billion of Payroll Support Program, or PSP, proceeds. 


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