The Main Squawk: Southwest COO hints at major network changes ahead of the Company’s “Investor Day,” apologizes in advance
Southwest COO Andrew Watterson says the Company will have to make some “difficult decisions” as it works to “drive [the network] back to profitability.” The comment, revealed in a leaked internal video update, included an apology to employees who could be affected by the yet-to-be-announced changes.
Mr. Watteron’s remarks are a reminder that the Airline needs to adapt to changing market demands and that not all of those changes may be comfortable.
The Dallas-based airline has long been a stronghold of non-stop business travel throughout the West Coast, but that landscape has changed. Pre-pandemic levels of business travel simply haven’t returned to that market, and Southwest is seeing it in their load factors and their yields.
“Road warriors just aren’t where they used to be,” the COO said in the leaked video. And he’s right: new customers in that region are “younger, [and] different,” and they’re reevaluating their business travel needs.
Additional details are expected later this week at the Company’s “Investor Day.” Rumors amongst the Southwest pilot group say they’re bracing for the closure of one or two crew bases, or a painful transition to a hub-and-spoke model. Neither decision, as Mr. Watterson points out, will be easy.
Alaska and Hawaiian received the green light from the U.S. Department of Transportation last week, paving the way for Alaska’s $1.9 billion acquisition to proceed as scheduled. The DOT attached a few conditions to its approval—all of which seem like a bit of a nothing-burger—including:
- The airline must continue operating “critical inter-island” service at “robust levels” across the archipelago
- The airline must continue operating key routes with limited or no competition between several Hawaiian airports and the U.S. mainland
- The airline cannot decrease the value of its rewards programs
None of these conditions will require major changes at the combined airline.
Boeing announced a hiring freeze for all employees and is considering furloughing executives as its aerospace worker strike may cost it $500 million per week, The Wall Street Journal reports. The rumored details surrounding the executive furloughs range from a schedule that involves three weeks on, one week off, to a modest vacation at CEO Kelly Ortberg’s newly purchased home on the Puget Sound. (Drinks not included.)
Brian Bryant, president of the International Association of Machinists and Aerospace Workers (IAM) told FreightWaves last week that the announcement was nothing more than “smoke and mirrors.”
A major point of contention regarding the labor dispute involves retirement benefits. Currently, most workers at Boeing’s plants in Washington can’t contribute to the Company’s 401(k) program due to a measly pay scale and low wages.
“They don’t have enough income to be able to even participate in the 401(k). It’s on Boeing; they’ve got to correct that.”
Brian Bryant, International President of the International Association of Machinists and Aerospace Workers (IAM)
Bloomberg Intelligence has been studying the strike and says amongst all of the customers on Boeing’s order book, Southwest and Alaska are likely to be most affected in the near term.
JetBlue is planning to open its first-ever airport lounges at New York-JFK in late-2025, with lounges in Boston to follow in early-2026. The news first broke in a conversation between President Marty St. George and Skift last week. Access will be tied to a yet-to-be-released premium credit card which the Airline believes will allow them to provide better service to their most valued customers.
Unlike Delta’s SkyClub, access will actually be prohibitive, addressing overcrowding concerns. The only customers eligible to enter the lounge will be high-tier customers with TrueBlue Mosaic status and customers flying in the Airline’s Mint cabin class on transatlantic flights.
The Queens-based airline will also restrict access to JetBlue customers only, meaning passengers traveling on airline partners will be refused entry. (Sorry AerLingus customers.)
Delta is adding seven new transatlantic routes to its operation next summer, including four to Italy, one to Belgium, one to Spain, and another to Ireland. Rumors of the announcement started circulating late-last week, which left plenty of time for pilots and cabin crews alike to dream about the 48-hour layover in Catania, Sicily.
The majority of the heavy lifting will be distributed across the Airline’s aging fleet of Boeing 767-300ER aircraft. Flights from Atlanta to Brussels, Detroit to Ireland, and Minneapolis to Rome, will be carried by its more desirable Airbus A330 fleet.
On another note, the Atlanta-based airline says the CrowdStrike outage won’t dent its annual profit projections. Spoiler alert: nobody believes them.
Air Canada will reduce its planned Vancouver to Hong Kong service to seven times weekly, down from ten. Service begins in January 2025.
Allegiant is pushing back its timeline to roll out Boeing 737 MAX service.
American is facing pressure from Citigroup to dump its co-branded credit card partnership with Barclays.
Breeze Adds 4 New Routes From Washington Dulles
British Airways is upping its service on its Boeing 777 fleet to Cancun from London-LGW in Summer 2025.
Delta will resume domestic widebody service between Detroit and Phoenix in October.
Harbour Air, the largest seaplane operator in North America, has… wheels?
JetBlue is expanding its relationship with Cape Air by permitting award travel on the Part 135 operator’s Cessna 402s.
Lufthansa is rolling out a new long-haul cabin on its Airbus A350s and Boeing 787s.
SAS is resuming service to Seattle from Copenhagen next summer. The route will be operated by the carrier’s Airbus A350 fleet, before switching to its Airbus A330 fleet by the end of the summer schedule.
Starlux wants to join the Oneworld alliance.
United will launch a “grab-and-go” United Club in Terminal B at Houston-IAH next year, which will basically consist of a few glorified vending machines, all for the very low price of $650/year.
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