Southwest Airlines trims cash burn, will keep middle seats open through November

KEY POINTS

• Southwest said its October capacity will likely fall 40 to 45% in October and 35% to 40% in November.
• The low-cost carrier will keep middle seats open until the end of November for travelers not flying together.
• The Dallas-based airline trimmed its cash-burn estimate for the third quarter to $17 million a day from an earlier estimate of $20 million.

A bird flies by in the foreground as a Southwest Airlines jet comes in for a landing at McCarran International Airport on May 25, 2020 in Las Vegas, Nevada.

Ethan Miller | Getty Images

Southwest Airlines on Wednesday said it has logged a "modest" improvement in bookings through October, helping it trim its daily cash burn estimate for this quarter by $3 million to an expected $17 million.

Despite the uptick in bookings, the Dallas-based airline said in a filing that it expects revenue to drop 65% to 75% in October and capacity to be down 40% to 50% from the same month last year as the coronavirus pandemic continues to hurt travel demand. It forecast November capacity to drop 35% to 40% from 2019.

"Passenger demand and booking trends remain primarily leisure-oriented and inconsistent by region," Southwest said. "The Company remains cautious in this uncertain demand environment and continues to plan for multiple scenarios for its fleet and capacity plans."

Southwest said it would extend a policy that leaves middle seats open on its flights, except for travelers in the same party, through the end of November, an effort to calm travelers nervous about flying in a pandemic and better compete at the start of the end-of-year holidays. Delta Air Lines, for example, last month said it would limit capacity on flights through Jan. 6.

Southwest shares were up more than 3% in morning trading.