A bird flies by in the foreground as a Southwest Airlines jet comes in for a landing at McCarran International Airport on May 25, 2020 in Las Vegas, Nevada.
Ethan Miller | Getty Images
Southwest Airlines on Wednesday said it has logged a “modest” improvement in bookings through October, helping it trim its daily cash burn estimate for this quarter by $3 million to an expected $17 million.
Despite the uptick in bookings, the Dallas-based airline expects revenue to drop 65% to 75% in October and capacity down 40% to 50% from the same month last year as the coronavirus pandemic continues to hurt travel demand. It forecast November capacity to drop 35% to 40% from 2019.
Southwest said it would extend a policy that leaves middle seats open on its flights, except for travelers in the same party, through the end of November, an effort to calm travelers nervous about flying in a pandemic and better compete at the start of the end-of-year holidays. Delta Air Lines, for example, last month said it would limit capacity on flights through Jan. 6.
Southwest shares were up 0.8% in premarket trading.
Labor Day unofficially marks the end of summer and the start of colder temperatures around much of the United States. This year, it is ushering in more worries for restaurant owners trying to keep their eateries afloat.
Chilly weather means fewer customers willing to eat outside, while indoor dining rooms will likely still face capacity limits. Landlords’ patience may be running out, and funding from the Paycheck Protection Program has dried up. Fine and casual dining restaurants will be missing out on large orders for holiday parties that won’t take place this year. And worst of all, the threat of a second wave of coronavirus infections looms, which could bring another round of strict lockdowns.
“Nobody knows what the normal flu season looks like when we combine it with Covid, so there’s quite a bit of concern,” said David Bagley, managing director of Carl Marks Advisors.
Industry experts predict that cold weather could undo some of restaurant industry’s recovery, which was both helped and hindered by government actions. Federal funds helped many establishments rehire workers and pay bills, while expanded outdoor dining has brought back some customers, even those leery of eating indoors. Still, some restaurants have significantly fewer tables outside than those that sit empty indoors.
“Even in good weather, outdoor dining is not a solution,” said Niki Russ Federman, co-owner of the 106-year-old eatery Russ & Daughters. “It’s not even a Band Aid. It’s a desperate lifeline to hang on a little longer until there’s actual relief.”
In New York City, where indoor dining remains verboten until Sept. 30, Russ & Daughters’ cafe reopened for outdoor dining in July, and sales slid 90% compared with the same time a year ago. The cafe lost $16,000 that month — without paying rent.
Patio heaters and tents could give some outdoor dining areas a longer lifespan. However, not all restaurant owners will want to spend money that they don’t have.
“It’s very hard to think about investing more money into outdoor dining when that’s a losing proposition,” Federman said.
Municipalities and states that allow indoor dining are continuing to restrict capacity, and frustration abounds with government officials’ perceived lack of transparency.
For example, before Gov. Andrew Cuomo announced on Wednesday the return of indoor dining in New York City at the end of the month, a coalition of local restaurants sued the city and the state for $2 billion, demanding an end to the ban. The New York City Hospitality Alliance, which represents thousands of restaurants and bars, threatened a similar suit in mid-August.
Cuomo is still limiting indoor dining rooms to a quarter of their prior capacity, and more than 10,000 restaurants will lose expanded outdoor dining when it expires at the end of October. Across the Hudson River, New Jersey resumed indoor dining at 25% capacity on Friday.
“With cold weather coming, with PPP money expiring, we are going to see a mass die-off of restaurants,” Federman said.
While chains like California Pizza Kitchen have already filed for bankruptcy, Bagley predicts that the next wave of restaurant bankruptcies will depend on their internal forecasts for the holiday season.
However, it’s the health of the independent restaurants that are most at risk because of the pandemic. A Bank of America study published last week found that spending at big chain restaurants has returned to growth, but spending at independent restaurants is still under pressure. Smaller eateries are more likely to be full-service restaurants, which traditionally rely more on dining room sales and don’t have much financial flexibility.
Bagley said the outcome also will depend on restaurants’ relationships with their landlords. Another shutdown or stricter capacity limits during the colder months could bring greater flexibility on rent payments. Otherwise lagging sales could be hard to use at the negotiating table.
“If sales are just slow because customers aren’t out and they don’t want to be out during that period of time out of fear, now what do I tell my landlord?” Bagley said. “If government shuts them down again, it actually may be better for restaurants.”
Federman, as part of the leadership team for the Independent Restaurant Coalition, is fighting for another path forward for smaller eateries. The group is lobbying for the passage of the Restaurants Act, which has garnered support on both sides of the aisle and would create a $120 billion grant program for independent restaurants through the end of the year. Eateries with annual revenue of $1.5 million or less would be prioritized during the first two weeks of the program. Without it, the IRC estimates that up to 85% of independent restaurants could close.
“As a whole, the restaurant industry has been so uniquely and disproportionately decimated by the pandemic and handcuffed in its ability to revive itself,” Federman said.
Travelers wearing face shields and protective masks walk with their luggage inside Tom Bradley International Terminal at Los Angeles International Airport (LAX) in Los Angeles, California, U.S., on Thursday, Aug. 13, 2020.
Bing Guan | Bloomberg | Getty Images
Late-summer getaways helped lift air travel during the Labor Day weekend but the coronavirus pandemic has left its mark on what has shaped up to be a dismal season for airlines.
The number of people screened by the Transportation Security Administration reached 968,673 on Friday, the highest since March 16, agency data released on Monday showed. During the Friday-through-Monday holiday weekend, close to 3.3 million passengers passed through TSA checkpoints, down nearly 60% from the holiday weekend in 2019. That, however, is an improvement from the depths of the coronavirus crisis in April when passenger volume was off by more than 95%.
From Memorial Day through Labor Day weekend, which comprises what is generally the busiest and most lucrative time of year for airlines, TSA screened 65 million people, down nearly 76% from the 269 million it screened on the same dates last year.
Airlines are now scrambling to create more flexible policies to win over travelers, particularly as what is generally the slower fall season followed by the end-of-year holidays approach. Among the changes is a scrapping of domestic ticket-change fees by United last month. A move Delta and American followed with similar policies.
Facing a dearth of business travel as companies are still reluctant to fly workers for meetings and events during the pandemic, carriers are also adding service to leisure destinations near mountains or beaches to try to fill planes.
U.S. Senate Majority Leader Mitch McConnell Cwalks pass the Ohio Clock Corridor on Capitol Hill in Washington, D.C., the United States, Aug. 10, 2020.
Ting Shen | Xinhua News Agency | Getty Images
The Senate will vote on a coronavirus stimulus bill as early as this week, Majority Leader Mitch McConnell said Tuesday.
In a statement, the Kentucky Republican said the chamber aims to take up what he called a “targeted proposal, focused on some of the very most urgent healthcare, education, and economic issues.” He did not specify what the legislation would include.
CNBC previously reported that the GOP was considering a roughly $500 billion proposal to address enhanced unemployment insurance, new small business loans, school funding and money for Covid-19 testing, treatment and vaccines. It is unclear how much the package will resemble the plan that was developing late last month.
The bill likely will not garner the 60 votes needed to get through the Senate or receive support in the Democratic-held House. Last week, Senate Minority Leader Chuck Schumer, D-N.Y., called the legislation as reported “completely inadequate.”
Democrats and the Trump administration have failed to break an impasse over coronavirus relief since talks between the sides collapsed late last month. Democratic leaders have pushed for the White House to offer at least $2.2 trillion in federal funding to boost the U.S. economy and health-care system during the pandemic. Republicans so far have not agreed to go higher than $1.3 trillion.
Congress has failed to pass a fifth coronavirus aid package even after a $600 per week extra jobless benefit, a federal moratorium on evictions and the window to apply for Paycheck Protection Program small business loans lapsed. The expiration of those lifelines has left millions made jobless by the coronavirus struggling to cover costs, even as the overall labor market recovers.
Last month, Republicans considered reinstating the extra unemployment insurance at a reduced $300 to $400 per week, CNBC reported. Schumer criticized the legislation in particular because reports said it did not include relief for state and local governments or money for rental and mortgage assistance.
Democrats have pushed for more than $900 billion in new aid for states and municipalities, some of which will have to cut services if they receive no more assistance. The White House, which charges that cities and states run by Democrats want funds to cover for financial mismanagement before the pandemic, has offered no more than $150 billion in new funding.
The bipartisan National Governors Association has asked for at least $500 billion in relief.
This story is developing. Please check back for updates.