Southwest CEO: Airline Industry Could Face a Radical Restructure

On Thursday, the CEO of Southwest Airlines (LUV) in a session with Fox News discussed extensively the new changes that could hit the airline industry in the months to come. The coronavirus pandemic has severely affected the industry and the chances of restructuring are quite high as many airlines have paused their commercial lines.

Southwest CEO Gary Kelly believes that there could be a need to “radically restructure” the industry as a whole, with the inclusion of Southwest given that the government has ordered carriers not to lay off employees until the end of September. The government has since supported the industry with financial assistance for payrolls and other necessities. Southwest had also successfully reached a $3.29 billion payroll deal with the US government. However, there are still a few worries as Kelly believes that it would only be a matter of time before airlines run out of money if air traffic doesn’t increase. Adding that business travel could remain “very weak” longer than expected.

According to Airlines for America, carriers in the US still spend over $10 billion per month amid the coronavirus pandemic, yet the demand for air travel still falls to only 10%.

Like many other carriers, Southwest has planned to start running international flights again in June. Targeting Mexico and the Caribbean as Kelly believes that many American travelers would “want to travel to these resort-type destinations.” Earlier last week, the US Department of Travel (DoT) announced that it would allow airlines to stop flying to nearly 5% of their previously served destinations. The purpose is to relieve some carriers from the burden of losing more money amid the coronavirus crisis.