Southwest trims schedule amid 'messy' operational difficulties
October 22, 2021
Southwest Airlines' staffing and operational challenges, along with the delta variant's demand-throttling effects plaguing all US carriers in August and September, cost it $300 million in revenue during the third quarter, the carrier estimates. Its operational difficulties have continued in the fourth quarter, prompting it to reduce its schedule through the first quarter of 2021. Southwest now expects its capacity in the fourth quarter will be down 8% versus 2019, a widening of 3 percentage points compared with its previous estimate. The Dallas-based carrier's operating revenue in the third quarter slid 17% versus the pre-pandemic third quarter of 2019, to $4.7 billion. Southwest made an operating profit of $733 million in the third quarter, compared with a profit of $819 million in the third quarter of 2019. "The bounce in revenues at the beginning of the third quarter came with a lot of bumps in the operation, as our historic staffing models left us short and caused us to miss our reliability plan for the quarter," said Southwest's chief executive Gary Kelly during a 21 October earnings call. "I would be the first to admit that things are messy. It is also very encouraging to see the earnings potential that we had in July, especially considering that business travel is far from recovered to 2019 levels, and our capacity is not fully restored with 24 airplanes still sitting on the ground. But it also illustrates that this virus and its effect on our business can be unpredictable and volatile." Incoming chief executive Bob Jordan, who will take the reins from Kelly on 1 February, notes that leisure and business booking trends have been recovering "nicely" since the US's rate of daily new cases of Covid-19 began falling in September. Nevertheless, Southwest foresees that continuing operational "inefficiencies", staffing shortages and increasing jet-fuel prices will lead to a 15-25% decline in revenue during the fourth quarter, versus the fourth quarter of 2019. The carrier has been "trimming" its schedule in the current quarter and the first quarter of 2022 to help it avoid the rolling flight cancellations its customers suffered through earlier in October. Southwest had cancelled more than 2,700 flights between 8 and 12 October, in an echo of its raft of flight cancellations in mid-June. The carrier blames the October cancellations primarily on "weather and other external constraints", which left aircraft and crews out of pre-planned positions. The carrier's most pressing immediate goal is to "bulk up" its staffing, Jordan says. "We've made tremendous progress, but it remains short of what is needed, especially when we dip into staffing reserves." Southwest ended the third quarter with $17 billion in liquidity.
AirAsia Thailand to restart flights from Suvarnabhumi base
October 22, 2021
AirAsia Thailand, also known as Thai AirAsia, is resuming flights in November from its operational base at Suvarnabhumi airport, commencing with six routes. The airline will commence flights to Chiang Mai, Nan, Phuket and Nakhon Si Thammarat starting 1 November, and to Chiang Rai and Krabi starting 19 November, it says in a 21 October release. In the coming weeks, AirAsia Thailand will offer 36 routes to 23 destinations, operating 60 flights a day. AirAsia Thailand chief executive officer Santisuk Klongchaiya stated that state domestic tourism campaigns and a policy to reopen Thailand from 1 November is "a positive signal" for the tourism industry. He noted that over the past two months, AirAsia has "witnessed continual growth in travel demand and the number of passengers booking each flight". “These developments have prompted the airline to resume more routes and further increase flight frequencies in time for the peak travel season during the final quarter of the year," he says. AirAsia says flight capacity will rise to a maximum 85% by December before rising to 100% in January 2022.
Garuda Indonesia still focused on restructuring
October 21, 2021
Garuda Indonesia has confirmed it remains focused on a comprehensive restructuring programme and has not received official information on other options like bankruptcy, as reported by local media. The airline says it is in discussions with the Ministry of State Owned Enterprises regarding its restructuring plan, in a 19 October filing to the Indonesia stock exchange, offering clarification to its queries stemming from local media reports. Garuda goes on to say that the restructuring will be implemented in line with its ongoing Penundaan Kewajiban Pembayaran Utang (PKPU) process with the aim of accelerating its recovery and improving financial performance. The airline is awaiting the verdict reading of its PKPU process on 21 October, after an Indonesian court postponed it by one week. The airline also adds that negotiations with creditors are ongoing to achieve the "best settlement and optimal restructuring" to improve its performance. Previously, Garuda was queried by the exchange in September on its outstanding obligations to creditors. Garuda faces debts of at least Rp70 trillion ($4.9 billion). It said in June that it aims to complete its restructuring within the year but did not commit to any timeline for the process or further steps to pay off debts.