Southwest sees slower third-quarter cash burn as bookings improve, demand still choppy

Southwest said Wednesday it expects cash burn in Q3 to slow as bookings improve modestly for August and September, even as demand remains choppy due to the coronavirus crisis, forcing the carrier to cut back its flight schedule. An improvement in bookings had stalled in early July and they remained depressed throughout the month due to a rise in COVID-19 cases, Southwest added. Shares of the carrier rose more than 3% in premarket trade after the company forecast lower current-quarter cash burn of about $20m per day, compared with its prior estimate of about $23m per day. Southwest, which has one of the strongest financial positions among US airlines, said it has decided to not participate in a US government secured loan program as it had taken actions to boost liquidity, and could secure additional financing at favorable terms, if needed. The company said its Q3 capacity would likely slump between 30% and 35%, compared with its prior expectation of a 20% to 30% drop, with October capacity expected to decrease in the 40% to 50% range, year over year. Southwest now expects August 2020 operating revenue to fall between 70% and 75% from a year earlier, compared with its earlier estimate of a decline of 70% to 80%.<br/>