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Southwest Airlines Pitches Freight-Only Flights To Forwarders

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Southwest Airlines Pitches Freight-Only Flights To Forwarders

Southwest Airlines Co. (NYSE: LUV) has joined the ranks of passenger airlines offering their aircraft to logistics companies and other shippers for dedicated cargo charters.

Recasting passenger aircraft as cargo planes is a way for airlines to recoup some lost revenue from the widespread grounding of fleets due to coronavirus travel restrictions, which have resulted in nominal bookings and a spike in cancellations. Most of the activity so far with carriers such as Delta Air Lines, United Airlines and Lufthansa has involved large, twin-aisle aircraft on inter-continental moves

Southwest Airlines, the top U.S. carrier by passenger count, mostly operates in the U.S., with international routes limited to Mexico, the Caribbean and Central America. Its fleet of more than 700 aircraft consists entirely of single-aisle Boeing 737 aircraft.

The Dallas-based carrier announced on its blog Tuesday that, for the first time in its nearly 50 years of existence, it will allow freight forwarders and other cargo customers to rent airplanes. It separately said it is cutting capacity for May through early June by more than 40%, which translates to about 2,000 flights per day.

"It's something that's available for anybody shipping those critical things that need to move fast and have a little more volume than can be handled in the commercial network at the moment," said Wally Devereaux, managing director of cargo and charters, in an interview. 

The economics of operating a plane with empty seats and cargo only in the bellyhold is especially challenging for narrow-body aircraft, but with fuel costs extremely low, freight rates high and capacity tight, the cargo-only product may work for all sides.

Cargo volumes have fallen in the past few weeks, but the drop has "not been as dramatic as what we've seen on the passenger side of the house," Devereaux added. Southwest is busy carrying COVID-19 test kits, personal protective equipment and e-commerce orders for individuals shopping online while stuck at home.

Meanwhile, Southwest Airlines Cargo is working to get its call-center employees set up to work from home in the next couple of weeks, Devereaux said. While most headquarters staff is working from home, essential personnel are working at the office. Employees have their temperatures checked on arrival and sit far apart in the call center. The cargo division is working on a solution that will let calls get routed to individuals' homes so they can work remotely, he said. 

In related news, Southwest disclosed Thursday that it has borrowed $2.3 billion from J.P. Morgan Chase, in addition to the previous $1 billion term loan it took last month. 

Airlines are tapping private markets, as much as possible, to maintain liquidity, even though they are eligible for billions in dollars of emergency federal assistance.

Image: Flickr/Tomás Del Coro

 

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