Please ensure Javascript is enabled for purposes of website accessibility

Southwest Cuts Flights as Coronavirus Weighs on Travel

By Lou Whiteman - Mar 17, 2020 at 12:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Airline has more than $6 billion in cash on hand to help weather the crisis.

Southwest Airlines (LUV 1.69%) joined the rush of U.S. airlines to draw down schedules due to the COVID-19 coronavirus pandemic, saying in a regulatory filing late Monday it would cut capacity by 20% through June at least.

Airlines have been grappling with plunging flight demand, leading to questions about the viability of the global industry. As the situation has worsened large international carriers have drawn down their schedules by 40% or more, and smaller airlines have been cutting as well.

A Southwest Airlines plane flies above the clouds.

Image source: Southwest Airlines.

Southwest earlier in the month took some initial steps, including pay cuts for executives, but the company on Monday withdrew its guidance for 2020 and said it was trimming its schedule.

"The company has experienced more dramatic declines in passenger bookings in March and second quarter 2020, as well as an unprecedented increase in close-in trip cancellations," Southwest said in the filing. "The company has recently experienced several days of net negative bookings, primarily in March and April 2020, where trip cancellations outpaced new passenger bookings."

Southwest is also instituting a hiring freeze, offering voluntary leave option for employees, and evaluating ways to cut capex spending.

The airline recently raised $500 million in fresh debt and entered into a $1 billion term loan credit facility agreement. It currently has about $6.2 billion in unrestricted cash.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Southwest Airlines Co. Stock Quote
Southwest Airlines Co.
LUV
$36.73 (1.69%) $0.61

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.