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Southwest Airlines is still a maverick.
While the three major US airlines – Delta, United and American – have introduced a simple and economical product, which usually offers no seat or early boarding. JetBlue plans to do it, but Southwest's general manager, Gary Kelly, has totally ruled it out. .
Speaking of two planned revenue-generating initiatives for 2020, which will be detailed later this year, Kelly also refuted any speculation and reiterated that the airline would not introduce baggage fees for the first two checked baggage. In other words, these bags will always fly freely.
Addressing financial badysts and the press on Thursday after Southwest announced its results for the fourth quarter and fiscal year 2018, which marked the 46th consecutive year of company profits, Kelly said answered a question as to whether the basic economic trend, including JetBlue's projects, led to Southwest's. future revenue generation strategy.
"I think the short answer is no, that's not what we answer; our abilities have evolved over time, "said Kelly. "I hope it means that they have improved. And we see opportunities where we can generate larger business volumes or more effectively in terms of pricing. And that's what we're looking for here in the short term. "
Two questions frequently raised by Kelly concern basic economics and purchase costs. This was verified on Thursday.
"You are not going to see the basic economy of the Southwest. This is not what we are doing and, as I said before, we will not charge the baggage fee. We believe that better opportunities are adapting to our brand, "he said." I like the fact that we are different, that they dissociate and that we do not do it. continue to look for solutions to meet the varied needs of travelers and how we can stay true to our brand and offer more value to road warriors, circulars once a year, anything. "
It's not common for you to hear an airline executive mentioning the needs of "travelers once a year," but apparently, Southwest could have a product launch in 2020 that partially addresses these often-forgotten customers.
Southwest warned in the fall that its costs were slightly higher than it was comfortable and that, in addition to seeking efficiencies, it would consider new revenue opportunities. In this regard, the airline announced Thursday to have generated pre-tax profits of $ 205 million through the improvement of its revenue management capabilities.
The airline does not plan to introduce any new ancillary services, such as its Early Bird Check-In or Business Select products, this year, but plans to create two in 2020, and will provide more services. information about it later this year.
In other events, Southwest officials have criticized the detrimental effects of the partial closure of the US government. Kelly called at one point the situation of "slump".
Southwest President Tom Nealon said the government shutdown cost the airline $ 10-15 million in revenue in January. Officials noted that Southwest was less exposed to closure because its travel contracts with the federal government were not comparable to those of some of its competitors. For example, Delta said the January shutdown required $ 25 million in revenue.
The partial shutdown of the government disrupted the much-anticipated launch of flights from Southwest to Hawaii. Chief Operating Officer Mike Van de Ven said that if the closure ends next week, Southwest could start service by the end of the first quarter, but the launch would be delayed further if it continues.
"I summarize it all in one word – it's infuriating," Kelly said of the government's closure, adding that no one can predict the damage to the economy if the closure is underway.
Chief Financial Officer, Tammy Romo, said the late launch of service in Hawaii increased Southwest's available seat cost by one percentage point due to factors such as underutilization of the fleet and the lack of service. increased airport costs.
However, officials said Southwest's financial performance was well-prepared for 2019.
Southwest's net income declined 62.6% to $ 654 million in the fourth quarter from $ 1.7 billion a year ago. The quarterly profit of 2018 would have been a record if it were exceptional items in 2017, including a $ 1.4 billion benefit due to tax reform. Revenues for the quarter increased 8.5% to $ 5.7 billion.
Photo Credit: Southwest Airlines launches March 07, 2018, the new Louisiana One specialty aircraft, in New Orleans. Stephen M. Keller / Southwest Airlines
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