Specialist
Former manager at Southwest Airlines Co
Agenda
- Southwest Airlines' (NYSE: LUV) financial liquidity outlook
- Corporate strategy during airline industry downturns
- New route and market share opportunities
- Implications of the 737 Max's return to Southwest’s fleet
Questions
1.
How has coronavirus impacted Southwest Airlines so far? How able is it to mitigate that impact compared with the legacy carriers, the LCCs [low-cost carriers] and ULCCs [ultra-low-cost carriers]?
2.
How would you describe Southwest’s competitive positioning and its long-term strategic plans pre- coronavirus? How has the environment derailed some of those plans?
3.
How would you assess the likelihood of any airlines filing for bankruptcy? How should we imagine the ripple effect on the industry if one airline files for bankruptcy?
4.
How would you rate the necessity of additional government funding if there is a second wave of coronavirus? Many states have rising case numbers, and travel may begin to decline again.
5.
Could you outline Southwest’s customer profile? What is its reliance on leisure and business travellers? What has been its go-to-market strategy to acquire these customers?
6.
Do you think Southwest will make bigger commitments and efforts to provide things such as first class offers and lounges, since you mentioned it currently doesn’t have any?
7.
What is unique about Southwest’s loyalty programme? What success has it had with growing it and how does it help with retention?
8.
How can Southwest further leverage its loyalty programme to win new customers during this period of uncertainty? How would you rate the risk of other airlines starting to change their loyalty programmes to mimic Southwest?
9.
How is pricing trending, and what determines price? What is the relationship with demand and capacity?
10.
How is Southwest strategising its domestic and international routes? Where is it positioned to penetrate and win over customers? Where is it at risk of losing customers?
11.
Are there any opportunities for Southwest to downsize or abandon any market? Or is it just focusing on expanding?
12.
What markets might Southwest seek to exit, and who do you think might make sense as a potential buyer?
13.
How would you value Southwest’s SGRs [slots, gates and routes]? How has the value of SGRs changed since the start of the coronavirus pandemic?
14.
Southwest has reduced its daily cash burn from a high of USD 30m in April to around USD 16-18m now. What do you think of its ability to further decrease cash burn, especially if we factor in the rise in cases?
15.
Given the recent 737 Max updates with the FAA [Federal Aviation Administration], how should we think about the process of reinstating the 737 Max? What will the transition process be like? What are your thoughts on the training process and maintenance requirements?
16.
Do you think the issue with the 737 Max was enough to urge Southwest to diversify its single fleet mix?
17.
What do you think the circumstances would need to be for Southwest to consider taking on deliveries from Boeing?
18.
Now that the 737 Max will likely mandate its own simulation training, would the same pilot be able to fly both the NG and the Max, or would Southwest have to realign its pilots and fleets?
19.
Southwest is committed to blocking middle states and operating at a roughly 60% load factor, at least until September. What is your take on this strategy? Could it be a way for Southwest to inspire confidence in its travellers again?
20.
I believe the typical breakeven load factor for airlines starts at 70%. What sort of pricing premium is required for Southwest to continue to operate at 60% and for it to become economically viable?
21.
You mentioned Southwest is executing its highest net promoter score ever. What are the different criteria? Where would Southwest over-perform and under-perform?
22.
Is there a particular topic we haven’t had a chance to discuss that you would like to include in your closing remarks?
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