Dallas-based Southwest Airlines reported a net loss of about $915 million for the second quarter on Thursday, but does not plan to pursue any furloughs, layoffs or pay cuts for the rest of the year, according to its earnings report.
The company's losses were a higher $1.5 billion when excluding special items.
Gary Kelly, the company's CEO, said the effects of the COVID-19 pandemic had drastically reduced air travel demand in March and April.
Although the company saw some improvements in bookings and revenues as leisure travel picked up again in May and June, Kelly said rising cases have now stalled those gains in July.
The company's operating revenue was down to $1 billion in the second-quarter, a nearly 83% decrease year-over-year, the report said.
"We expect air travel demand to remain depressed until a vaccine or therapeutics are available to combat the infection and spread of COVID-19," Kelly said. "We will adjust our flight schedule aggressively and frequently in response to this volatile demand environment."
About 27% of the company's workforce decided to take voluntary extended emergency time off or participate in another separation program to prevent layoffs, the report said. That's about 16,900 employees.
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The effort saved Southwest a projected $400 million for its fourth quarter, Kelly said.
He said because so many had chosen to participate in those programs, the company did not intend to pursue any other cuts, though he did caveat that they "will continue to plan for multiple weak scenarios."
Operating revenues were down nearly 92% in April year-over-year, but slowyly started to improve, as they went to a nearly 85% decrease in May and then 73% in June.
May represented a shift for the company, where new passenger bookings outpaced trip cancellations, creating a net positive in bookings, a reversal from March and April.
That net positive has continued to date, the report said, though "trip cancellations have increased modestly" in July and the rate of revenue improvement has slowed.
Southwest also received about $2.9 billion from the federal government's Payroll Support Program, according to the report. The program was a part of the Coronavirus Aid, Relief, and Economic Security, or CARES, Act passed by Congress earlier this year.
Part of the company's major adjustments in the second quarter were also restructuring its route network and implementing additional cleaning and safety measures, like social distancing and requiring face coverings, the report said.
Southwest plans to continue to limit the number of seats sold on its planes through October 2020 and will keep middle seats open between passengers on their aircraft. Kelly said feedback from customers has been very positive on their safety measures.
The company remains focused on regulating its cash burn, Kelly said, which was an average of $23 million per day in the second quarter. It had been $30 million per day in April but decreased to $16 million per day in June as air travel demand picked back up.
Core cash burn is expected to increase again in July to $18 million a day as demand falters, the report explained, but the company estimates its third-quarter number will remain around $23 million a day.
"We are laser-focused on returning to break-even cash flow," Kelly said.
The company held an earnings call Thursday morning to discuss the report.