Southwest Airlines Company

Good day and welcome to the Southwest Airlines third quarter 2020 conference call. My name is Chad and I'll be moderating today's call. This call is being recorded and a replay will be available on southwest.com in the investor relations section. After today's prepared remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. At this time, I'd like to turn the call over to Mr. Ryan Martinez, Managing Director of Investor Relations. Please go ahead, sir.

Thank you, Chad, and I appreciate you all joining us for our third quarter call. In just a moment, we will share our remarks with you and then open it up for Q&A. So you will hear a comprehensive update today from our Chairman of the Board and CEO, Gary Kelly, Chief Operating Officer, Mike Vandiven, our President, Tom Nealon, and Executive Vice President and CFO, Tammy Romo. Just a few quick reminders. We will make forward-looking statements today, which are based on our current expectations of future performance, and our actual results could differ substantially from these expectations. We also have several special items in our third quarter results, which we excluded from our trends for non-GAAP purposes, and we will reference those non-GAAP results in our remarks today. We have all of this spelled out in our press release from this morning regarding special items, forward-looking statements, non-GAAP reconciliations to GAAP results, and other important risk factors. And, of course, you can find our press release and other helpful resources at our Investor Relations website. And now we'll go ahead and get started, and I will turn it over to Gary.

Thank you, Ryan, and good morning, everybody, and thanks for joining us for our third quarter earnings call for 2020. Obviously, we can't be happy or satisfied with the loss, but I'm going to tell you up front some of the things that I'm happy and grateful for. Number one, the record loss was significantly less than I feared three months ago. We got past the July wobble in demand. Number two, our outlook for fourth quarter reflects a continuation of this improvement, better revenues, lower cost compared to the third quarter. and assuming our October trans hold for November and December. And that's, of course, also assuming that we have stable fuel prices. Number three, we've announced nine new destinations to be added over the next three quarters. I'm happy to have these opportunities. I'm happy to play offense. I'm happy to generate more revenue on minimal incremental cost, which means more cash and I'm happy to put idle aircraft and excess staff to work. Number four, I'm happy that there's still a chance that we can preserve pay, jobs, and service by Congress extending the payroll support program for another six months. Getting that support extended is a top priority. I'm hopeful it will happen quickly so we can terminate work on our plan B which is to press our unions to sacrifice with concessions in order to prevent furloughs, as we currently are roughly 20% overstaffed. Number five, I'm happy that finally we seem to be nearing the ungrounding of the max. Number six, I'm happy that we have the scientific evidence to provide comfort and assurance that it is safe to unblock the middle seats, which will happen on December the 1st. and the scientific support arrives as demand continues to improve, which should absorb our 50% increase in seats offered for sale. And our models show that this will be revenue, cost, and operating profit positive, and that all makes me happy too. I'm happy that we have at least three years of cash, and I know it's borrowed money, but that should see us through this crisis And if we have to, we can borrow more. Number eight, I'm happy that we're uniquely prepared for this environment with our business model. We have low costs, low fares, no hidden fees and nothing to hide, no second class, the nation's best route system, the nation's largest airline, 97% domestic, and better prepared than ever to serve business travelers when they return to the skies. And then finally, I'm enormously grateful for our people. They've done a phenomenal job monitoring and adjusting this airline. They've done a phenomenal job running a superb, safe, on-time, high-quality operation. They've done a phenomenal job serving our customers with industry-leading hospitality. And finally, I'm grateful for their resilience and their perseverance and their devotion to our cause. our leaders are going to continue to do everything in their power to take care of all the people who have built and operate this airline and serve our customers every day. Job one is keeping our company financially strong and healthy and with perpetual competitive advantages. So those are a sampling of my favorite things. And yes, the worst may be behind us, and I hope there are no more surprises. And yes, we have a long way to go, but we will get through this, we will survive this, and we will emerge with the best balance sheet and the best business model to compete and thrive in the post-pandemic world. And Mike, Tom, and Tammy have a lot to share with you, so I'm going to wrap up and turn it over to Mr. Mike Vandeman. Well, thanks, Gary.