Dallas-based Southwest and other airlines are cutting thousands of spring flights from schedules because of serious headwinds from high fuel prices, staffing challenges and other ongoing supply chain constraints.
Southwest Airlines recently axed 14,500 flights from its March through May schedule, according to flight schedule service Cirium, and the company on Tuesday cited “continuing challenges with available staffing.”
Southwest, which made the announcement in a regulatory filing Tuesday, said it now expects its flying schedule to be about 4% lower for 2022 than it was in 2019, even after stronger-than-anticipated bookings so far this year. For the second quarter alone, Southwest Airlines’ capacity will be about 7% lower than it was in 2019, even though travelers are eager to fly.
The carrier, however, said its revenue would be slightly better than previous estimates.
“The company’s current leisure revenue trends for spring break travel are strong and above 2019 levels,” Southwest said.
The cuts come even as airlines such as Chicago-based United see that “demand for travel has exceeded the company’s previous expectations” but the repercussions of the economy’s quick bounceback puts pressure on inflation and labor that were hard to gauge a few months ago when schedules were made.
Southwest also said business travel continues to suffer, particularly in January and February with the omicron variant of COVID-19 sweeping the country.
Competing airlines are cutting schedules for other reasons that are making it difficult for carriers to return to pre-pandemic levels of flying.
On Tuesday, United said it was cutting its capacity for the rest of 2022 “in response to several macroeconomic factors, including rising fuel prices as well as expected aircraft delivery delays.” United trimmed its May schedules by about 2,500 flights and more than 20,000 flights each month from June through August. Recently, Seattle-based Alaska Airlines and Las Vegas-based Allegiant said they were cutting flight schedules by about 5% with high fuel prices that have surged even higher after Russia’s invasion of Ukraine and subsequent sanctions.
After adding more than 5,000 workers last year, Southwest Airlines said in January that it plans to add another 8,000 new employees this year. The airline recently increased its starting wage from $15 to $17 an hour in January, a bump that is expected to cost the company $20 million to $25 million this year.
“While we’ve got a great plan for 2022, it all comes down to hiring,” Southwest Airlines CEO Bob Jordan said in January.
Southwest hasn’t been hit as hard by higher fuel prices as other airlines because it aggressively hedges against high fuel prices. About 65% of the company’s fuel is bought with hedged contracts, the company said in an investor presentation.
A combination of high demand and constraints on flying could mean that prices continue to rise for airfares. Southwest hiked prices systemwide on Feb. 1, chief financial officer Tammy Romo said Tuesday during an investor conference.
“The pricing environment has been healthy as demand has been returning following the omicron variant,” she said.
Higher prices combined with fewer flights could mean a tougher go this spring and summer travel season as many get back to traveling for the first time since the pandemic began in early 2020. Prices had already been rising quickly before the recent constraints as fares return to pre-pandemic levels.
Outgoing American Airlines CEO Doug Parker said Tuesday at the same investor conference that the carrier recorded three of its best ticket-selling days of all time last week.
The flight cuts could hit North Texas’ airports hard, where Southwest Airlines is cutting about 9% of all flights in April and May. That includes all flights to Louisville during the month and significant reductions in service to cities such as Burbank, Calif.; Minneapolis, Minn.; and Harlingen, Texas.
Southwest said the hit from omicron in January and February will mean the company won’t be profitable for the first quarter, even though it “continues to expect to be solidly profitable in March,” the month of spring break.
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