Southwest Airlines to cut capacity as virus spread erodes demand

Southwest Airlines will shave at least 20% of its flight capacity, freeze hiring and offer leaves to workers as the spread of coronavirus erodes demand for travel. The carrier secured a US$1b term loan and drew down the full amount of an existing $1b unsecured revolving credit facility, according to a regulatory filing Monday. It also suspended existing financial guidance for the year. Southwest’s pulldown follows major reductions at larger carriers and underscores the extent to which the outbreak and travel restrictions have devastated demand for air travel. “It is uncertain how long the recovery from this will be, and it is certain this will be far worse than 9/11 was,” CE Gary Kelly told workers. Southwest’s traffic reductions will be in effect April 14 through June 5, and the carrier warned that it expects revenue trends in Q2 to decline further. <br/>