The Southwest Airlines Pilots Association (SWAPA) Board of Directors has made the decision to cancel the 24-hour picket that was previously set for June 15 due to the passing of Captain Richard Jenkins. Jenkins was a member of Southwest’s negotiating team and SWAPA offers our prayers and condolences to his family and fellow team members at this time.
Southwest Airlines has extended its flight schedule into early next year, allowing Customers to begin booking their travel for the 2023 holiday season.
“Our Summer operational performance is off to a strong start with Customers taking much-needed vacations and important business trips,” said Andrew Watterson, Chief Operating Officer at Southwest Airlines®. “We know some already are thinking about holiday plans and we want them to know we’re ready. Ahead of winter, we are delivering on our plans to add capabilities, tools, and equipment to reliably connect Customers to people and places that matter most in their lives.”
However the pilots may interupt the planned schedule, threathening to strike if a new contract is not signed.
Meanwhile SWAPA issued this statement:
The Southwest Airlines Pilots Association (SWAPA) will be conducting a 24-hour informational picket June 15-16 outside Southwest Airlines’ headquarters starting at 8 a.m. CT.
SWAPA has become increasingly frustrated with Southwest’s lack of commitment to meet during this negotiation cycle. SWAPA leaders have repeatedly requested more frequent bargaining dates in order to reach an agreement, but so far, SWA Labor Relations has committed to just 15 days of negotiations between now and Labor Day.
This 24-hour picket is meant to symbolize that just as Southwest leaders depend on our pilots both day and night, weekday and weekend to get our passengers from point A to point B, we depend on our company to earnestly come to the table — day or night, weekday or weekend — to reward the most productive pilots in the industry. Our pilots stand ready to work and to negotiate any time.
SWAPA and Southwest have been in negotiations for a new contract for more than three years and in federal mediation since September 2022.
The Southwest Airlines Pilots Association (SWAPA) will be conducting a 24-hour informational picket June 15-16 outside Southwest Airlines’ headquarters starting at 8 a.m. CT.
SWAPA has become increasingly frustrated with Southwest’s lack of commitment to meet during this negotiation cycle. SWAPA leaders have repeatedly requested more frequent bargaining dates in order to reach an agreement, but so far, SWA Labor Relations has committed to just 15 days of negotiations between now and Labor Day.
This 24-hour picket is meant to symbolize that just as Southwest leaders depend on our pilots both day and night, weekday and weekend to get our passengers from point A to point B, we depend on our company to earnestly come to the table — day or night, weekday or weekend — to reward the most productive pilots in the industry. Our pilots stand ready to work and to negotiate any time.
SWAPA and Southwest have been in negotiations for a new contract for more than three years and in federal mediation since September 2022.
Southwest Airlines Company is providing updated guidance regarding selected financial trends.
The following table presents updated selected financial guidance for second quarter 2023. These projections are based on current booking trends and the Company’s current outlook, and actual results could differ materially.
| 2Q 2023 Estimation | Previous estimation | |||
| RASM (a), year-over-year | Down 8% to 10% | Down 8% to 11% | ||
| ASMs (b), year-over-year | Up ~14% | No change | ||
| Economic fuel costs per gallon1 (c) | ~$2.55 | $2.45 to $2.55 | ||
| CASM-X (d), year-over-year2 | Up 5% to 8% | No change | ||
| Scheduled debt repayments (millions) | ~$10 | No change | ||
| Interest expense (millions) | ~$65 | No change |
| (a) Operating revenue per available seat mile (RASM, or unit revenues). | ||
| (b) Available seat miles (ASMs, or capacity). The Company’s flight schedule is currently published for sale through November 4, 2023. | ||
| (c) Based on the Company’s existing fuel derivative contracts and market prices as of May 25, 2023. Includes fuel taxes and fuel hedging premium expense of $0.06 per gallon and favorable cash settlements from fuel derivative contracts of $0.09 per gallon, compared with previous expectations of fuel hedging premium expense of $0.06 per gallon and favorable cash settlements from fuel derivative contracts of $0.13 per gallon. | ||
| (d) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing (CASM-X). | ||
Travel demand during the Memorial Day weekend was strong. Second quarter 2023 leisure travel demand and yields continue to be strong, including a recent improvement in close-in leisure demand and yields, while managed business revenue trends continue to perform as previously expected. The Company’s second quarter 2023 capacity and CASM-X are expected to be in line with previous guidance. The Company has not made any material revisions to its 2023 fleet or capacity plans compared with previous guidance, which reflected the expectation to receive approximately 70 Boeing 737-8 aircraft deliveries and for capacity to increase approximately 14 percent to 15 percent, year-over-year.
Barring significant unforeseen events and based on current trends, the Company continues to expect solid profits in second quarter and full year 20233, both excluding special items.
1Economic fuel cost projections do not reflect the potential impact of special items because the Company cannot reliably predict or estimate the hedge accounting impact associated with the volatility of the energy markets or the impact to its financial statements in future periods. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for projected results is not meaningful or available without unreasonable effort.
2Projections do not reflect the potential impact of fuel and oil expense, special items, and profitsharing because the Company cannot reliably predict or estimate those items or expenses or their impact to its financial statements in future periods, especially considering the significant volatility of the fuel and oil expense line item. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for projected results is not meaningful or available without unreasonable effort.
3Projections do not reflect the potential impact of special items because the Company cannot reliably predict or estimate those items or expenses or their impact to its financial statements in future periods. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for these projected results is not meaningful or available without unreasonable effort.
Meanwhile SWAPA representing the pilots is not happy.
Southwest Airlines today announced more nonstop service to the nation’s capital in an expansion of summer travel options for Customers by bringing two additional nonstop routes to Reagan National Airport (DCA).
From July 11 through Sept. 4, 2023, Southwest® will offer additional nonstop service between:
J.D. Power issued their latest survey on airline satisfaction:
A combination of soaring demand, limited supply and surging airfares have helped airlines book record revenues during the past two quarters, but this golden age of enhanced revenues is coming at the expense of customer satisfaction. According to the J.D. Power 2023 North America Airline Satisfaction Study,SM released today, customer satisfaction with major airlines is down significantly for a second consecutive year, introducing the risk of possible brand damage if the current pattern of price hikes, staffing shortages and reduced routes continues.
“If yield management were the only metric airlines needed to be successful in the long term, this would be a banner year for the industry because they are operating at peak economic efficiency,” said Michael Taylor, travel intelligence lead at J.D. Power. “From the customer perspective, however, that means planes are crowded, tickets are expensive and flight availability is constrained. While these drawbacks have not yet put a dent in leisure travel demand, if this trend continues, travelers will reach a breaking point and some airline brands may be damaged.”
Following are some of the key findings of the 2023 study:
Southwest Airlines ranks highest in customer satisfaction in the economy/basic economy segment for a second consecutive year, with a score of 827. Delta Air Lines (801) ranks second and JetBlue Airways (800) ranks third.
The North America Airline Satisfaction Study measures passenger satisfaction with airline carriers in North America based on performance in eight factors (in alphabetical order): aircraft; baggage; boarding; check- in; cost and fees; flight crew; in-flight services; and reservation. The study measures passenger satisfaction in three segments—first/business, premium economy and economy/basic economy—and is based on responses from 7,774 passengers. Passengers needed to have flown on a major North America airline within the past month of completing a survey. The study was fielded from March 2022 through March 2023.
Southwest Airlines Pilots Association’s (SWAPA) strike authorization vote has closed after just a week and half with 98% participation and 99% of pilots voting to authorize a strike. This historic vote from the pilot union was scheduled to run through the end of May, but the pilots of Southwest Airlines have already made their voices heard about the operational disasters and the lack of progress after three-plus years of stagnant negotiations. “This is a historic day, not only for our pilots, but for Southwest Airlines,” said SWAPA President Casey Murray. “The lack of leadership and the unwillingness to address the failures of our organization have led us to this point. Our pilots are tired of apologizing to our passengers on behalf of a company that refuses to place its priorities on its internal and external customers.”
Murray continued, “Today, our Pilots have empowered our Negotiating Committee Chair, Captain Jody Reven, to petition the National Mediation Board to release us to self-help imminently at which time we will follow the process set forth by the Railway Labor Act and continue toward a strike. We want our passengers to understand that we do not take this path lightly and are disheartened that the LUV airline has gotten so far away from the values set forth by Herb Kelleher. We want our customers to be prepared for the path ahead and make arrangements on other carriers so that their plans through the summer and fall are not disrupted.”
Accommodations Plus International (API) has announced they have been selected by Southwest Airlines to provide the technology solution Aircrew Exchange Server (ACES) to support hotel needs for Crew Members.
API’s technology, once fully implemented, will provide optimization and enhancements, through automation, real- time updates, and data to support Crewmembers’ hotel needs. It will also provide cost savings to the airline, while allowing Southwest to provide Crew Members with top-of-the-line layover experiences.
SWAPA issued this statement:
Voting opened on May 1 in the Southwest Airlines Pilots Association’s (SWAPA) strike authorization vote. This historic vote from the pilot union is taking place in the wake of Southwest’s epic December meltdown and after three years of negotiations with the company. “We have been attempting to negotiate with Southwest in earnest for years, but they have shown no willingness to address some of the issues that impact not only our pilots but our customers as well, such as scheduling work rules and technology improvements. It is essential that we modernize systems and procedures to be able to keep pace with other carriers and give our passengers the level of service they expect,” said SWAPA President Casey Murray. “The lack of discussion or commitment by our leadership team to rectify these issues for our passengers and our pilots are driving us to carry forward on this path afforded to us by the Railway Labor Act.”
The strike authorization vote opened on May 1, and will close May 31 and will ultimately give the pilots the ability to strike once released to self-help. Murray continued, “We believe that this timeframe gives our customers time to book elsewhere, so that they can have confidence that their summer vacations, honeymoons, and family outings are assured.”
While the final vote will not be counted until the end of May, the Association is already seeing strong voter turnout and positive response. Murray stated, “The decision to authorize a strike is not one we have taken lightly, but given the lack of accountability and dearth of leadership exhibited by our current executives, we felt that this was a last resort to try to force them to face the issues plaguing our passengers, our frontline employees, and our pilots.”
Southwest Airlines today unveiled a new logo jet dedicated to the state of Hawaii.
Boeing 737-8 MAX 8 N8710M (msn 42567) now displays the rich colors of the island state.
Southwest Airlines issued this statement:
Southwest Airlines, on the anniversary of its first interisland flights within Hawaii, commemorates beginning a fifth year of serving the Aloha State by introducing Imua One™, a Hawaii-themed aircraft livery that symbolizes an enduring partnership between the Hawaiian Islands and Southwest Airlines®. The high-flying tribute is dedicated to Southwest® Employees and to communities across Hawaiithat welcomed the carrier with warm aloha. Imua is a rallying cry in the Hawaiian language that translates to an urging forward, and it underscores a key value at Southwest—Teamwork. For more than five decades, the People of Southwest have moved together toward an ever-brighter future with their unmistakably unique strength of courage and spirit.
Oahu-based Osaki Creative Group designed Imua One with the guidance of Herman Piikea Clark, Kanaka Maoli/indigenous Hawaiian artist, designer, and researcher. Its distinctive design features eight elements that represent concepts in Hawaiian culture that also align with Southwest values. The aircraft design features stars for each of the five airports in Hawaii Southwest serves (Honolulu, Lihue (Kauai), Kahului (Maui), Kona (Island of Hawaii), and Hilo (Island of Hawaii); six paddlers in an outrigger bring to life the concept of Imua; and six turtles in two groups of three to represent harmony and balance. Emblazoned near the nose of the aircraft, a lei honors unique Islands through their official flowers. Reflective of distinctive colors in the Southwest Heart livery, including bold blue, warm red, and sunrise yellow, a gradient transition from blue to yellow represents the evolution from night to day, and honors Hawaiian history of journeying the Pacific using wind, and following the guidance of the sun, stars, and moon to navigate.
The eight central visual elements of the Imua One livery hold significance in Hawaii and at Southwest:
Southwest unveiled Imua One at Long Beach Airport, one of eight mainland gateways where Southwest offers nonstop service to the Islands, facilitating seamless connections to airports across the western two-thirds of the U.S. mainland. Southwest Employees across the country watched through a livestream as Kahu Kordell C. L. Kekoa, a Hawaiian church Minister, led a blessing and dedication of the aircraft, witnessed by Southwest Employees and Customers, many with ties to the rich culture in Hawaii. Before its first touchdown, Imua One traveled from a painting facility in Spokane, Wash., where citizens of the Spokane Tribe of Indians joined Kahu Kekoa in a special ceremony that brought together Washington First Nations and Kanaka Maoli/indigenous Hawaiian people to share a blessing and pay tribute to the launch of Imua One.
Southwest also donated $10,000 to eight organizations in the Islands to underscore a commitment to longtime community partners in Hawaii. These organizations support causes close to the Heart of Southwest and align with elements and themes featured on Imua One:
Leading up to today’s dedication, Southwest Employees watched a weekly, eight-part video series, “Honoring the Heart of Hawaii,” in which Southwest Employees, known to one another as Cohearts, shared deeper, personal meaning behind the symbols.
Imua One is the first Southwest aircraft with in-seat power available at every seat. It is the third Boeing 737 MAX 8 in the Southwest fleet of specialty liveries. The other 737 MAX 8 aircraft with special paint schemes include the Herbert D. Kelleher, dedicated to Southwest’s beloved Founder, and the Heroine of the Heart, a tribute to Southwest President Emeritus Colleen C. Barrett. Other special paint schemes in the Southwest fleet dedicated to specific states include: Arizona One, California One, Colorado One, Florida One, Freedom One (flag of the United States of America), Illinois One, Lone Star One (Texas), Louisiana One, Maryland One, Missouri One, Nevada One, New Mexico One, and Tennessee One.
Following a dedication in Long Beach, Calif., Imua One will fly first to Honolulu, and during the weekend will visit each airport in Hawaii served by Southwest. The tour allows Southwest Employees and community members to share in the special tribute. Imua One then will re-join the Southwest fleet and fly throughout the Southwest network on regularly scheduled service.
Since its first service to Hawaii in 2019, Southwest is grateful to have grown to serve five airports in the Aloha State, and to link the Hawaiian Islands to the mainland with nonstop service through eight gateway airports: Long Beach, Calif.; Oakland, Calif.; Sacramento, San Jose, Calif.; Los Angeles(LAX); San Diego; Las Vegas; and Phoenix. Today, Southwest offers 90 departures a day, including 60 daily flights within the Islands.
Southwest Customers, followers, and fans are invited to track the aircraft (tail number N8710M) and share photos of Imua One on social media using #ImuaOne.
The airliner was painted at Spokane, WA.
Video:
Southwest Airlines Company today reported its first quarter 2023 financial results:
Bob Jordan, President and Chief Executive Officer, stated, “As expected, we incurred a first quarter 2023 net loss that resulted from the negative financial impact of approximately $380 million pre-tax, or $294 million after-tax, related to the December 2022 operational disruption. The majority of this impact was driven by a negative revenue impact of approximately $325 million, as a result of cancellations of holiday return travel and a deceleration in bookings for January and February 2023 travel. Despite that, travel demand and revenue trends in March 2023 were strong and resulted in solid profitability for the month and record first quarter revenues.
“Our operational performance was also strong in first quarter 2023. Southwest ranked number two in domestic ontime performance year-to-date through March 20233, as our People successfully navigated nine named storms. During first quarter 2023, we completed our reviews of the December 2022 operational disruption and released the report summary and action plan publicly at www.southwest.com/travel-disruption-action-plan. We expect to meet our goals to complete the action plan by winter 2023. We continue to make operational investments and remain intensely focused on running a safe, reliable, and efficient operation while delivering our legendary Customer Service.
“We recently reached a tentative agreement with the Transport Workers Union Local 550 (TWU 550), representing our Meteorologists, and I commend the spirit of cooperation by both Negotiating Committees. Currently, this brings us to contract ratification or tentative agreement with six workgroups represented by collective bargaining agreements in the past six months. We are glad we can reward our People, and we remain focused on negotiations of the three remaining open contracts.
“While we are mindful of the uncertain economic environment, demand for domestic air travel remains strong, thus far. Our goal remains to manage inflationary cost increases and maintain our competitive cost advantage. Due to recent delivery delays at The Boeing Company (Boeing), we are further reducing planned 2023 aircraft deliveries to 70 from 90, resulting in an approximate one-point decrease in year-over-year planned 2023 capacity. Based on current revenue trends and our cost outlook, which includes market wage rate accruals for all open labor contracts, we expect solid profits in second quarter 2023 and continue to expect solid profits and year-over-year growth in both margins and return on invested capital for full year 2023. We also continue to expect our network to be roughly restored to pre-pandemic levels by the end of this year. We remain confident in our low-cost, low-fare business model and our long-term strategy, which is supported by a robust set of strategic initiatives designed to drive significant financial value. I am very grateful for the tremendous efforts of our Employees and their unwavering focus on delivering Reliability and Hospitality to our valued Customers.”
Guidance and Outlook:
The following tables introduce or update selected financial guidance for second quarter and full year 2023, as applicable:
| 2Q 2023 Estimation | |||||||||||||||||||||||||||||||
| RASM (a), year-over-year | Down 8% to 11% | ||||||||||||||||||||||||||||||
| ASMs (b), year-over-year | Up ~14% | ||||||||||||||||||||||||||||||
| Economic fuel costs per gallon1,4 | $2.45 to $2.55 | ||||||||||||||||||||||||||||||
| Fuel hedging premium expense per gallon | $0.06 | ||||||||||||||||||||||||||||||
| Fuel hedging cash settlement gains per gallon | $0.13 | ||||||||||||||||||||||||||||||
| ASMs per gallon (fuel efficiency) | 78 to 80 | ||||||||||||||||||||||||||||||
| CASM-X (c), year-over-year5 | Up 5% to 8% | ||||||||||||||||||||||||||||||
| Scheduled debt repayments (millions) | ~$10 | ||||||||||||||||||||||||||||||
| Interest expense (millions) | ~$65 | ||||||||||||||||||||||||||||||
2023 Estimation | Previous estimation | |||||||||||||||||
| ASMs (b), year-over-year | Up 14% to 15% | Up 15% to 16% | ||||||||||||||||
| Economic fuel costs per gallon1,4 | $2.60 to $2.70 | $2.65 to $2.75 | ||||||||||||||||
| Fuel hedging premium expense per gallon | $0.06 | No change | ||||||||||||||||
| Fuel hedging cash settlement gains per gallon | $0.10 | No change | ||||||||||||||||
| CASM-X, year-over-year5 | Down 2% to 4% | Down 3.5% to 5.5% | ||||||||||||||||
| Scheduled debt repayments (millions) | ~$85 | No change | ||||||||||||||||
| Interest expense (millions) | ~$250 | No change | ||||||||||||||||
| Aircraft (d) | 814 | 833 | ||||||||||||||||
| Effective tax rate | 23% to 24% | No change | ||||||||||||||||
| Capital spending (billions) (e) | ~$3.5 | ~$4.0 | ||||||||||||||||
| (a) Operating revenue per available seat mile (RASM, or unit revenues). |
| (b) Available seat miles (ASMs, or capacity). The Company’s flight schedule is currently published for sale through November 4, 2023. The Company currently expects third quarter 2023 capacity to increase in the range of 11 percent to 13 percent, and fourth quarter 2023 capacity to increase in the range of 20 percent to 22 percent, both year-over-year. Included in the Company’s updated capacity guidance is a decrease in previously planned year-over-year capacity as a result of delivery delays at Boeing, planned in the post-summer time period from September through December 2023. |
| (c) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing (CASM-X). |
| (d) Aircraft on property, end of period. Due to delivery delays, the Company now estimates approximately 70 Boeing 737-8 (-8) aircraft deliveries in 2023, compared with its previous guidance of approximately 90 -8 aircraft deliveries. The Company now expects to retire 26 Boeing 737-700 (-700) aircraft in 2023, compared with its previous guidance to retire 27 -700 aircraft. As a result, the Company now expects to end 2023 with 814 aircraft. The delivery schedule for the Boeing 737-7 (-7) is dependent on the Federal Aviation Administration (FAA) issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and Boeing may continue to experience supply chain challenges, so the Company therefore offers no assurances that current estimations and timelines are correct. |
| (e) The Company now estimates its 2023 capital spending to be approximately $3.5 billion, which assumes approximately 70 -8 aircraft deliveries, compared with its previous 2023 capital spending estimate of approximately $4.0 billion, which assumed approximately 90 -8 aircraft deliveries. The Company now estimates its full year 2023 aircraft capital spending to be approximately $2.3 billion, compared with its previous guidance of approximately $2.8 billion, and continues to estimate its full year 2023 non-aircraft capital spending to be approximately $1.2 billion. |
Revenue Results and Outlook:
Despite a negative revenue impact of approximately $325 million—associated with the December 2022 operational disruption—the Company’s first quarter 2023 revenue performance was strong. The negative revenue impact was primarily isolated to January and February 2023, with March 2023 experiencing a robust recovery, driven by strong yields and notable strength in Rapid Rewards® redemptions. March 2023 managed business revenues improved significantly compared with January and February 2023 and were nearly restored to March 2019 levels. The Company is pleased with its managed business revenue recovery thus far, due to investments in Southwest Business and expansion into Global Distribution Systems aimed at continuing to grow the Company’s presence in the corporate travel space.
The current booking curve appears to have returned close to pre-pandemic norms, and leisure demand and yields continue to be strong heading into the busy summer travel season. While March 2023 managed business revenues largely recovered to March 2019 levels, the Company expects corporate revenue trends to continue to be choppy as Customer travel patterns evolve post-pandemic. However, the Company continues to expect further sequential recovery in managed business revenues in second quarter 2023 compared with first quarter 2023, driven by anticipated growth in corporate accounts and passengers.
The Company’s second quarter 2023 RASM guidance includes a headwind of approximately four and a half points, year-over-year. This headwind is driven by approximately $300 million of additional breakage revenue in second quarter 2022—a higher-than-normal amount related to flight credits issued during the pandemic that were set to expire unused—and the Company’s July 2022 policy change to eliminate expiration dates on qualifying flight credits6, which resulted in the percentage of breakage revenue normalizing to historical levels beginning in third quarter 2022. Flight credits that never expire6, along with Rapid Rewards points that never expire7, are industry-leading, Customer-friendly policies.
The Company recently selected the Amadeus Network Revenue Management product as its new revenue management system provider—slightly ahead of the mid-2023 implementation timing outlined at the Company’s 2022 Investor Day. The Company was pleased with initial observations during the production pilot and is excited about the potential for incremental revenue, driven primarily by improved science in forecasting and network optimization. The Amadeus product is now fully implemented and is currently managing all bookings and departure dates.
Fuel Costs and Outlook:
The Company’s multi-year fuel hedging program continues to provide insurance against spikes in energy prices and significantly offset the market price increase, year-over-year, in jet fuel in first quarter 2023. The Company’s current fuel derivative contracts contain a combination of instruments based in West Texas Intermediate and Brent crude oil, and refined products, such as heating oil. The economic fuel price per gallon sensitivities4 provided in the table below assume the relationship between Brent crude oil and refined products based on market prices as of April 19, 2023.
| Estimated economic fuel price per gallon, including taxes and fuel hedging premiums | |||||||||
| Average Brent Crude Oil price per barrel | 2Q 2023 | 2023 | |||||||
| $60 | $1.85 – $1.95 | $2.20 – $2.30 | |||||||
| $70 | $2.15 – $2.25 | $2.40 – $2.50 | |||||||
| $80 | $2.35 – $2.45 | $2.60 – $2.70 | |||||||
| Current Market (a) | $2.45 – $2.55 | $2.60 – $2.70 | |||||||
| $90 | $2.60 – $2.70 | $2.75 – $2.85 | |||||||
| $100 | $2.80 – $2.90 | $2.90 – $3.00 | |||||||
| $110 | $3.00 – $3.10 | $3.05 – $3.15 | |||||||
| Fair market value | $70 million | $262 million | |||||||
| Estimated premium costs | $30 million | $121 million | |||||||
| (a) Brent crude oil average market prices as of April 19, 2023, were $83 and $82 per barrel for second quarter and full year 2023, respectively. |
In addition, the Company is providing its maximum percentage of estimated fuel consumption8 covered by fuel derivative contracts in the following table:
| Period | Maximum fuel hedged percentage (a) | ||||||||||||||||||
| 2023 | 50 % | ||||||||||||||||||
| 2024 | 51 % | ||||||||||||||||||
| 2025 | 10 % | ||||||||||||||||||
| (a) Based on the Company’s current available seat mile plans. The Company is currently 51 percent hedged for second quarter 2023 and 48 percent hedged for second half 2023. |
Non-Fuel Costs and Outlook:
The majority of the Company’s first quarter 2023 CASM-X increase, year-over-year, was attributable to continued inflationary cost pressures, in particular with higher labor rates, including market wage rate accruals, for all Employee work groups, increased technology spending, and higher rates for airport and benefits costs. The remainder of the increase was driven primarily by operational disruption-related expenses, including travel expense reimbursements to Customers and an increase in the expected redemption rate of Rapid Rewards points offered as a gesture of goodwill to Customers.
The Company expects second quarter 2023 CASM-X to increase in the range of 5 percent to 8 percent, year-over-year. In addition to general inflationary cost pressures, the year-over-year increase is primarily due to higher labor rates, including market wage rate accruals, for all Employee work groups, as well as the timing of planned maintenance expenses for the Company’s Boeing 737-800 (-800) fleet.
The Company currently expects its full year 2023 CASM-X to decrease in the range of 2 percent to 4 percent, year-over-year—approximately one and one-half points higher than its previous guidance to decrease in the range of 3.5 percent to 5.5 percent, year-over-year. Approximately one point of the increase versus previous guidance is due to lower available seat miles in 2023, attributable to fewer planned aircraft deliveries in light of recent delays from Boeing. The remainder of the increase is primarily due to the timing of planned maintenance expenses for the Company’s -800 fleet.
First quarter 2023 net interest expense, which is included in Other expenses, decreased $146 million, year-over-year. The decrease was primarily due to a $122 million increase in interest income driven primarily by higher interest rates, coupled with a $27 million decrease in interest expense driven primarily by various debt repurchases and repayments throughout 2022.
Capacity, Fleet, and Capital Spending:
The Company’s first quarter 2023 capacity increased 10.7 percent, year-over-year, which was higher than its previous guidance of up approximately 10 percent, due to a higher than expected March completion factor. During first quarter 2023, the Company received 30 -8 aircraft, as expected, and retired seven -700 aircraft, compared with its previous guidance of five -700 retirements, shifting forward two -700 aircraft retirements from the second half of 2023. The Company ended first quarter 2023 with 793 aircraft.
Based on anticipated aircraft delivery delays from Boeing, the Company now expects it will receive approximately 70 -8 aircraft deliveries in 2023, compared with its previous guidance of approximately 90 -8 deliveries. As such, the Company is planning on flight reductions in second half 2023, most notably in fourth quarter, and now expects its 2023 capacity to increase approximately 14 percent to 15 percent, year-over-year, roughly one point lower than the Company’s previous guidance.
The Company’s planned deliveries continue to differ from its order book displayed in the table below. In addition, the Company now expects to retire 26 -700 aircraft in 2023, compared with its previous guidance of 27 -700 retirements, due to shifting one -700 retirement into 2024. As a result of the revision in aircraft deliveries and retirements, the Company now expects to end the year with 814 aircraft, compared with its previous guidance of 833 aircraft.
The Company’s first quarter 2023 capital expenditures were $1.0 billion, driven primarily by aircraft-related capital spending, as well as technology, facilities, and operational investments. Due to the recent changes to expected 2023 aircraft deliveries, the Company now estimates its 2023 capital spending to be approximately $3.5 billion, compared with its previous guidance of approximately $4.0 billion. This assumes approximately $2.3 billion in aircraft capital spending, compared with its previous guidance of approximately $2.8 billion, and continues to assume approximately $1.2 billion in non-aircraft capital spending, which includes tens of millions in operational disruption-related investments.
Since the Company’s previous disclosure on January 26, 2023, the Company exercised five -7 options for delivery in 2024 and converted 11 2024 -7 firm orders to -8 firm orders. In addition, in April 2023, the Company exercised 11 -7 options for delivery in 2024 and converted eight 2024 -7 firm orders to -8 firm orders. The following tables provide further information regarding the Company’s order book and compare its order book as of April 27, 2023, with its previous order book as of January 26, 2023. For purposes of the delivery schedule below, the Company continues to include the remaining 46 of its 2022 contractual undelivered aircraft (14 -7s and 32 -8s) within its 2023 commitments. Given Boeing’s current supply chain and aircraft delivery delays, the Company will continue working with Boeing to solidify future delivery dates.
| Current 737 Order Book as of April 27, 2023: | |||||||||||||||||||||
| The Boeing Company | |||||||||||||||||||||
| -7 Firm Orders | -8 Firm Orders | -7 or -8 Options | Total | ||||||||||||||||||
| 2023 | 31 | 105 | — | 136 | (c) | ||||||||||||||||
| 2024 | 48 | 19 | 19 | 86 | |||||||||||||||||
| 2025 | 30 | — | 56 | 86 | |||||||||||||||||
| 2026 | 30 | 15 | 40 | 85 | |||||||||||||||||
| 2027 | 15 | 15 | 6 | 36 | |||||||||||||||||
| 2028 | 15 | 15 | — | 30 | |||||||||||||||||
| 2029 | 20 | 30 | — | 50 | |||||||||||||||||
| 2030 | — | 55 | — | 55 | |||||||||||||||||
| 2031 | — | — | — | — | |||||||||||||||||
| 189 | (a) | 254 | (b) | 121 | 564 | ||||||||||||||||
| (a) The delivery timing for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct. |
| (b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. |
| (c) Includes 30 -8 deliveries received through March 31, 2023. In addition, the Company has included the remaining 46 of its 2022 contractual undelivered aircraft (14 -7s and 32 -8s) within its 2023 commitments. Due to Boeing’s supply chain challenges and the current status of the -7 certification, the Company currently estimates approximately 70 -8 aircraft deliveries in 2023. The 2023 order book detail is as follows: |
| The Boeing Company | ||||||||||||||||||||
| -7 Firm Orders | -8 Firm Orders | Total | ||||||||||||||||||
| 2022 Contractual Deliveries Remaining | 14 | 32 | 46 | |||||||||||||||||
| 2023 Contractual Deliveries | 17 | 73 | 90 | |||||||||||||||||
| 2023 Total | 31 | 105 | 136 | |||||||||||||||||
| Previous 737 Order Book as of January 26, 2023 (a): | ||||||||||||||||||||||||
| The Boeing Company | ||||||||||||||||||||||||
| -7 Firm Orders | -8 Firm Orders | -7 or -8 Options | Total | |||||||||||||||||||||
| 2023 | 31 | 105 | — | 136 | ||||||||||||||||||||
| 2024 | 51 | — | 35 | 86 | ||||||||||||||||||||
| 2025 | 30 | — | 56 | 86 | ||||||||||||||||||||
| 2026 | 30 | 15 | 40 | 85 | ||||||||||||||||||||
| 2027 | 15 | 15 | 6 | 36 | ||||||||||||||||||||
| 2028 | 15 | 15 | — | 30 | ||||||||||||||||||||
| 2029 | 20 | 30 | — | 50 | ||||||||||||||||||||
| 2030 | — | 55 | — | 55 | ||||||||||||||||||||
| 2031 | — | — | — | — | ||||||||||||||||||||
| 192 | 235 | 137 | 564 | |||||||||||||||||||||
| (a) The ‘Previous 737 Order Book’ is for reference and comparative purposes only. It should no longer be relied upon. See ‘Current 737 Order Book’ for the Company’s current aircraft order book. |
Liquidity and Capital Deployment:
Awards and Recognitions:
Environmental, Social, and Governance (ESG):
Southwest Airlines has resumed operations after temporarily pausing flight activity this morning to work through data connection issues resulting from a firewall failure.
Early this morning, a vendor-supplied firewall went down and connection to some operational data was unexpectedly lost. Southwest Teams worked quickly to minimize flight disruptions.
We ask that travelers use Southwest.com to check flight status or visit a Southwest Airlines Customer Service Agent at the airport for assistance with travel needs. We appreciate the patience of our Customers and Employees during this morning’s brief disruption.
Southwest Airlines celebrated 25 years of its bridge-building Adopt-A-Pilot® Program by unveiling an aircraft (737-7H4 N400WN, msn 27891) adorned with a nose decal and fuselage artwork dedicated to nearly 14,000 Pilots and half-million students that participated in the award-winning Program.
In a quarter century, Adopt-A-Pilot has impacted the lives of more than 556,000 fifth-grade students in classrooms across the country.
The aircraft (N400WN), unveiled at a celebration at the Southwest Airlines® Maintenance Hangar in Dallas, brought together fifth-grade students enrolled at a local elementary school who have “adopted” a Pilot, along with current and past participants of the Adopt-A-Pilot Program.
Adopt-A-Pilot, which began in 1997, brings Southwest® Pilots into classrooms to engage students in interactive, aviation-related lessons that help define future successes, and sparks interest in aviation careers. Each school year, students in more than 1,500 classrooms across the country “adopt” Southwest Pilots who mentor students in the fifth-grade. As part of the award-winning Adopt-A-Pilot Program, students research careers and develop life skills, while Pilots underscore the importance of staying in school. The Adopt-A-Pilot curriculum is a supplementary way to educate students through aviation-themed activities related to science, geography, math, writing, and other core subjects.
Southwest is committed to bringing America’s future leaders unique learning opportunities by committing resources and time to inspire students and help them define, articulate, and plan for future success. Students who were in classrooms which adopted Southwest Pilots have gone on to pursue careers in aviation, including:
Continuing its commitment to bring resources to support education and student development, Southwest announced a $10,000 donation to Ethridge Elementary School in The Colony, Texas. The school intends to use the funds to procure necessary supplies and equipment for science, technology, engineering, and mathematics (STEM) education. Fifth-grade students at Ethridge Elementary School adopted a Southwest Pilot for the 2022-2023 school year and attended the unveiling event.
To learn more about the Southwest Adopt-A-Pilot Program, please visit Southwest.com/AdoptAPilot.
All photos by Southwest Airlines.
Southwest Airlines has announced it will add additional staffing to monitor winter weather and has also made major software changes.
The airline issued this statement:
Dear Valued Rapid Rewards® Members,
For many travelers in the final weeks of 2022, holiday plans were disrupted by an epic winter storm that impacted airline travel across the nation. A weather event that affected all carriers became a winter preparedness and Crew network event unique to Southwest Airlines®. Not only did we let you down, we also let down our People who heroically serve you.
Following these events, we conducted a thorough internal review, working with our Board of Directors, and engaged respected aviation consultancy Oliver Wyman for a third-party assessment. From that work, we have identified key root causes of the event and developed a conclusive action plan to address them.
Key root causes:
Our action plan:
Click here to read the specific actions we are taking in each category.
With this plan in motion, we can move forward and focus on continuing to deliver the reliable operation, high-quality Customer Service, and legendary Hospitality that Southwest is famously known for. We are already off to a great start in 2023, holding the number two spot in on-time performance year-to-date through March, and remain thankful for your continued support of Southwest.
We look forward to seeing you onboard again soon.
Sincerely,
Bob Jordan
President & Chief Executive Officer
More from the Washington Post:
Southwest Airlines today will share an overview of the prioritized actions being implemented to strengthen the airline’s operational resiliency. The actions will be previewed by Bob Jordan, Southwest’s President and Chief Executive Officer, at the J.P. Morgan Industrials Conference in New York and are designed for Customers and Employees to continue benefiting from the airline’s 52-year history of providing Safe, reliable, and Customer-friendly Southwest Hospitality.
As a result of the initial assessments conducted by Southwest, and the globally-recognized aviation consultancy Oliver Wyman, the airline has developed a three-part Tactical Action Plan to boost operational resiliency in key areas across the Company. The airline’s existing five-year Operational Modernization Plan, which began in 2022, is also underway and focuses on operational investments and organizational alignment to support Customers and Employees.
“We understand the root causes that led to the holiday disruption, and we’re validating our internal review with the third-party assessment. Now, we expect to mitigate the risk of an event of this magnitude ever happening again,” said Bob Jordan, Southwest’s President and Chief Executive Officer. “Work is well underway implementing action items to prepare for next winter—with some items already completed. I want to thank our Employees and Customers for their patience and grace, and we’re resolved to emerge an even stronger airline.”
In addition to Winter Storm Elliot, which was more severe than expected, a driver of the disruption was determined to be the volume of cascading and close-in flight cancelations during the storm which overwhelmed Station operations and the airline’s Crew Network and hindered established processes and internal tools. While the airline had existing technology and staffing in place to handle many types of irregular operations, the pace and breadth of disruptions during this extreme event strained the ability to create timely operational solutions. The airline will provide additional communication in the coming weeks, including a microsite summarizing key findings and mitigation actions.
Highlights of the Tactical Action Plan
Accelerate Operational Investments: The airline began a five-year Operational Modernization Plan prior to December 2022 with many initiatives already underway to support operational resiliency. Now, ongoing implementation of tools and technology that allow for a greater pace of recovery during extreme events will be prioritized, and the airline is, currently, budgeted to spend more than $1.3 billion on investments, upgrades, and maintenance of information technology systems in 2023. For example, Crew Optimization software has been recently upgraded to address a functional gap that was revealed in December. Crew Scheduling and Customer phone systems also will be upgraded for better surge protection and efficiency during periods of high call volumes.
Winter Operations: Challenges with infrastructure, winter equipment, and winter weather preparedness have been, or will be, addressed through various actions, including purchasing additional deicing trucks; securing additional deicing pads and deicing fluid capacity at key network locations; and purchasing more engine covers and engine heaters for cold weather operations. Southwest was the first U.S. airline to hire back to pre-pandemic total staffing by June 2022, and, going forward, the airline will further augment winter staffing levels—for example, when Ground Operations Employees are limited to the amount of time they can work outside in extreme temperatures. Additionally, the airline plans to implement a new weather application to provide Crews with more real-time and dynamic weather indications to enhance deicing holdover times—which determines the time required before aircraft must be deiced again prior to departure.
Cross-Team Collaboration: Actions have already been taken to align various Network Planning and Network Operations Control Teams under one Senior Leader for better execution of operational plans. Additionally, data on early-indicator dashboards has been enhanced to highlight key operational metrics, and the airline will better integrate aircraft and Crew recovery decision making and optimization.
“I’m very encouraged by the work underway to address the challenges we faced in December. Our operational performance this year has been among the best in the industry, and we’re committed to completing our action items while also running a Safe, reliable operation supported by our Legendary Customer Service that has made us famous throughout our 52-year history,” said Andrew Watterson, Southwest’s Chief Operating Officer. “I’m confident in our path forward and truly believe our best days are ahead.”
On the financial side, the company expects to report a loss for the first quarter but for the year it expects a robust profit.
Top Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N1781B (N8814K) (msn 42664) BFI (Brian Worthington). Image: 960261.
Southwest Airlines aircraft photo gallery:
Southwest Airlines is preparing for October travel by extending its flight schedule through November 4, 2023.
Kansas City Travelers Have More International Options
On the heels of Kansas City, Mo., opening its new state-of-the-art terminal last week, Southwest® is boosting its international offering with the addition of two nonstop routes.
Effective Oct. 7, 2023, Southwest will offer seasonal service on Saturdays between:
Kansas City, Mo. and Montego Bay, Jamaica*
Kansas City, Mo. and Cabo San Lucas/Los Cabos*
*Subject to government approval
Both new routes complement the carrier’s existing service between Kansas City and Cancun which seasonally adjusts to daily service beginning Oct. 5, 2023.
Long Beach Sees Southwest Growing to the Northwest
Southwest continues bringing more service to its Long Beach, Calif., Customers. Today, the airline added two new destinations for Southern California travelers linking them to the Pacific Northwest.
Effective Oct. 7, 2023 Southwest will offer the nonstop service on Saturdays and Sundays between:
Long Beach, Calif. and Boise, Idaho
Long Beach, Calif. and Portland, Ore.
The airline is also celebrating today’s start of daily nonstop service between Long Beach and Kansas City, and will soon inaugurate service between previously announced routes including:
| Beginning Date | Travel between Long Beach and | Frequency |
| July 11, 2023 | Colorado Springs, Colo.El Paso, Texas | Daily Daily |
| July 15, 2023 | Orlando, Fla. | Saturdays |
| Sept. 5, 2023 | Albuquerque, N.M. | Daily |
| Previously announced service |
More Flights Landing in Denver
Southwest is bringing more flights to Denver. Already its busiest airport operation, the carrier will grow even more with seven additional flights in October, offering up to 310 departures a day beginning on Oct. 5, 2023. As Southwest looks ahead to the fall, it’s also preparing to begin nonstop service on Saturdays between Denver and San Jose, Costa Rica, which launches this weekend.
Top Copyright Photo: Retro salute: Southwest Airlines Boeing 737-8 MAX 8 N872CB (msn 67780) (Colleen Barrett) LAX (Michael B. Ing). Image: 960135.
Southwest aircraft photo gallery:
Southwest Airlines flight WN2452 from Havana to Fort Lauderdale/Hollywood with Boeing 737-8 MAX 8 N8972Q on March 5, 2023 made a safe emergency landing at HAV after suffering a bird strike on takeoff and an engine shutdown.
More from the Guardian:
Based on the forecasted weather conditions for the cities and dates below, our scheduled service may be disrupted (flights may be delayed, diverted, and/or cancelled):
Monday-Wednesday, February 20-22
Monday-Thursday, February 20-23
Tuesday-Thursday, February 21-23
Customers holding reservations to/from/through the cities above on the corresponding dates, may rebook in the original class of service or travel standby (within 14 days of their original date of travel between the original city-pairs and in accordance with our accommodation procedures) without paying any additional charge.
Customers who purchased their itinerary via Southwest.com or our mobile app are eligible to reschedule their travel plans online or from their mobile device.
Customers who did not purchase a ticket via Southwest.comcan call 1-800-435-9792 to speak with a Customer Representative.
Customers in the U.S. scheduled to travel internationally must call 1-800-435-9792 to speak with a Customer Representative for assistance with rebooking.
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