Southwest Airlines has “ample growth opportunities” once it gets past the staffing shortages curtailing the carrier’s near-term growth potential, according to CFO Tammy Romo.
Southwest went into 2022 with the aim of operating 100% of 2019 capacity levels this year, but in late January rolled back that goal to down 4% versus 2019 for the full year. That guidance remains intact, though first-quarter capacity is now expected to be down 10% compared to 2019, a slight downgrade. Southwest’s second-quarter 2022 capacity is anticipated to be down 7% versus 2019, while July-December capacity is expected to be flat versus 2019.
Southwest is planning to hire 8,000 new staff this year, which the carrier believes will enable it to go beyond pre-pandemic capacity levels in 2023.
“We know that we have pent-up demand in the markets we were serving pre-pandemic,” Romo told a J.P. Morgan investors’ conference last week, explaining that a central component of rebuilding Southwest’s network is adding “frequencies and depth” on its existing network.
Romo said Southwest believes it has the advantage over other airlines in the US domestic market because of the “the breadth and depth of our network,” adding: “It really is like a spider web. No other [US] carrier has the network that Southwest has, and you can’t just put that together in a day. This has taken us decades to build.”
Southwest, which has always targeted low-fares leisure traffic, can measure market health by the strength of its summer season. “However, it’s still early in the summer booking curve,” Romo said. But she noted that the airline is “really encouraged by what we are seeing thus far” in terms of summer demand, adding: “Based on our current trends … we are optimistic about the [summer] seasonal uptick in leisure demand.”
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