In August through October 2020, Southwest reported modest improvements in close-in leisure passenger demand, but, due to a deceleration in improving revenue trends for November and December 2020 in recent weeks, the airline says that it remain cautious for the reminder of the year.
Southwest continues to expect its fourth quarter 2020 capacity to decrease approximately 40%, year-over-year. The Company recently adjusted its January 2021 published flight schedule, and currently estimates its January 2021 capacity to decrease in the range of 35 to 40%, year-over-year.
Southwest adds that it continues to pursue additional revenue opportunities that utilize idle aircraft and employees. The airline has added new services for the rest of the year and into early 2021 but states that it also intends to add more services to Sarasota Bradenton International Airport in Florida in first quarter 2021, and will seek to leverage additional airports in or near cities where its Customer base is large, along with adding easier access to popular leisure-oriented destinations from across its domestic-focused network.
Southwest’s average daily core cash burn in October 2020 was approximately $10 million, which compares favourably with its previous estimate of approximately $12 million per day, primarily due to continued improvements in close-in leisure demand. The airline now estimates its average daily core cash burn to be in the range of $10 million to $11 million in fourth quarter 2020, which compares with its previous estimate of approximately $11 million.
Since the beginning of 2020, Southwest has raised a total of approximately $18.9 billion, net, including $13.4 billion in debt issuances and sale-leaseback transactions, $2.2 billion through a common stock offering, and $3.4 billion of Payroll Support Program proceeds. As of November 10, 2020, it had cash and short-term investments of approximately $13.6 billion, well in excess of debt outstanding.
The Company continues to have unencumbered assets worth approximately $12 billion, including approximately $10 billion in aircraft and approximately $2 billion in non-aircraft assets such as spare engines, ground equipment, and real estate. In addition to the value from aircraft and other physical assets, Southwest has significant value from its Rapid Rewards loyalty program.