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Demand for Hawaii is strong, Southwest Airlines CEO says

  • JAMM AQUINO / JAQUINO@STARADVERTISER.COM
                                A Southwest Airlines 737 aircraft comes in for a landing on Oct. 2 at Daniel K. Inouye International Airport.

    JAMM AQUINO / JAQUINO@STARADVERTISER.COM

    A Southwest Airlines 737 aircraft comes in for a landing on Oct. 2 at Daniel K. Inouye International Airport.

DALLAS >> Just how bad was 2020 for the airline industry? The six biggest U.S. airlines lost $34 billion, and Southwest suffered its first full-year loss since Richard Nixon was president and gasoline sold for 36 cents a gallon.

It was a disaster for airlines, worse than Sept. 11, 2001, or the global financial crisis — some very small carriers didn’t survive it — and the new year is off to a grim start.

On Thursday, Southwest, American and JetBlue reported that they lost a combined $3.5 billion in the final three months of the year. All issued dismal revenue outlooks for the current quarter that echoed similar pessimism from Delta, United and Alaska, which posted financial results earlier.

But Southwest CEO Gary Kelly said beach- and nature-inspired destinations continue to outperform other locales, and added that Hawaii began the fourth quarter with encouraging momentum.

“The whole story is demand, in my mind,” Kelly said. “The Hawaii demand is actually pretty darn strong. And what we’ve seen is Hawaii, they’ve gone through, I’m not sure, how many executive orders we’ve actually had out of Hawaii. I think 12, 13, something like that. A lot of executive orders with different ways of managing through the quarantines and such. The pre-cleared program that they’ve put in place now that several carriers are leveraging, it really does make the experience pretty straightforward.”

He reiterated that demand for Hawaii “is actually very, very solid. So we think there’s a tremendous amount of opportunity there. We’re excited about Long Beach (Calif.), what we’re doing there. We’re excited about opening up the San Diego service that was delayed.”

San Diego service was pushed back several times and finally started Nov. 4. It has flown uninterrupted since. On Thursday, Southwest announced it will be connecting Long Beach to Kahului beginning March 11, the same day it begins previously announced service between Long Beach and Honolulu.

U.S. airlines are looking past spring and hoping that as more people are vaccinated against COVID-19, carriers can salvage something from the peak summer vacation season.

But even that cautious optimism is threatened. Yes, the number of new reported cases of coronavirus in the U.S. have eased in the last few weeks, but they remain high. And now a halting rollout of vaccines threatens to further delay a recovery in travel and the travel industry.

President Joe Biden reinstated COVID-19 travel restrictions this week on most non-U.S. travelers from Brazil, the U.K. and South Africa. There is also a new U.S. requirement that noncitizens provide proof of a negative test for COVID-19 before boarding a flight to the United States.

On Thursday, as airlines reported results, a new coronavirus variant identified in South Africa was found in the U.S. for the first time, with two cases diagnosed in South Carolina.

“Travel restrictions on international have resulted in a reduction in demand,” American Airlines CEO Doug Parker said. “We have seen that particularly on the short-haul international travel, things like Mexico and the Caribbean.”

The airlines support testing international travelers, viewing that as a way to eliminate other border barriers and quarantine requirements. However, they are dead-set against testing travelers within the United States, calling it costly and impractical.

A top official at the U.S. Centers for Disease Control and Prevention said this week that the health agency is “actively looking” at testing passengers before they board domestic flights.

Kelly argued that the U.S. has limited testing capacity and should focus its virus-control efforts on vaccinating people faster.

“Why pick on air travel?” Kelly said. “If you want to test people, test them — but test them before they go to the grocery store, test them before they go to a restaurant.”

With travel likely to remain weak for several more months, airlines are continuing to slash costs and encourage workers to leave. Federal aid has averted more furloughs, at least through March. Airlines short on revenue have amassed tens of billions of dollars from private lenders and taxpayer-funded relief to help them get through the pandemic.

The focus is now on the rate of cash burn, a balancing act that is essential to riding out the global pandemic. American said it will lose $30 million a day in the first quarter. Southwest estimates average core cash burn for the first quarter to be approximately $17 million.

Wall Street analysts expect the airlines will lose money again this year, although not as much, according to data compiled by FactSet.


Associated Press writer David Koenig and Star-Advertiser reporter Dave Segal contributed to this story.


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