'It has a 9/11-like feel': Southwest CEO says bookings down precipitously from coronavirus concerns
Southwest Airlines doesn't serve Asia or Europe, but that doesn't mean the nation's largest domestic carrier is immune from coronavirus travel fallout.
The airline has seen a "very noticeable, precipitous decline in bookings'' in the past week, a decline that continues daily, CEO Gary Kelly said in an interview with CNBC on Thursday.
"It's really all of a sudden,'' he said, noting that Southwest's ticket sales were solid through February, before the coronavirus spread broadened and intensified. .
The drop-off in new bookings plus an increase in cancellations was so dramatic Southwest warned investors about it Thursday, saying its first quarter revenue will be down an estimated $200 million to $300 million from previous expectations.
The airline isn't alone, of course. The International Air Transport Association on Thursday boosted its estimates of the global financial hit from COVID-19 from $29.3 billion to between $63 billion and $113 billion as the bookings falloff has spread well beyond Asia, which is home to the majority of the world's nearly 100,000 cases of coronavirus.
Also playing a role and hitting business travel hard: the increasing number of conventions and business meetings being canceled, he said.
"I definitely think it's an overreaction, but nonetheless it is happening,'' he said.
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Kelly noted the significant flight cuts competitor United Airlines announced Wednesday to cope with weak travel demand and said Southwest will consider trimming some flights if the bookings decline continues. In addition to United, JetBlue Airways said it plans to cut flight capacity by 5%, and Norwegian Air said it is cutting 22 transatlantic flights.
Asked in the interview with CNBC's Phil LeBeau whether Southwest plans to dramatically discount fares to lure anxious travelers, Kelly said he doesn't think that would work.
"I don’t know that it’s a price issue,'' he said. "The economy is strong. People have money. They have the means to travel and to spend. This is they don't want to fly, for the obvious reason.''
Kelly said he doesn't remember a drop-off in ticket sales at Southwest during the SARS outbreak in 2003. He said the bookings decline is more akin to those Southwest has seen during recessions and 9/11.
"9/11 wasn't an economically driven issue for travel – it was more fear, quite frankly,'' he said. "And I think that's really what's manifested this time. … It has a 9/11-like feel. Hopefully we'll get this behind us very quickly.''
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