Transcript: Southwest's Gary Kelly on "Face the Nation," May 3, 2020
The following is a transcript of an interview with Southwest Airlines CEO Gary Kelly, that aired Sunday, May 3, 2020, on "Face the Nation."
MARGARET BRENNAN: One of those airlines is Southwest Air. Gary Kelly is the company's chairman and CEO, and he joins us from Dallas this morning. Good morning to you.
SOUTHWEST AIRLINES CEO GARY KELLY: Hi, MARGARET.
MARGARET BRENNAN: Is it safe to fly again?
KELLY: It is. You know, we're- we're- we're doing everything possible to encourage people to come back and fly. We're cleaning airplanes. We're requiring masks of our employees and our customers. We're using very deep cleanings every night. We're using electrostatic misters, which will kill the virus on surfaces for up to 30 days. We're exercising social distancing. And onboard the aircraft, we won't be booking airplanes full so that people can spread out. So absolutely, we're doing everything we can to make it as safe as humanly possible.
MARGARET BRENNAN: And you stopped things like food service and the like. I mean, those sound like good measures. But, you know, we had a guest on our program last week, Barry Diller, who is- is a big investor. And he said it's just absurd if you do things like remove the middle seat to have some spacing. I mean, to his point, you still have a confined space. You still have a shared bathroom. You still have people who are walking down the aisle, going to their seat, walking past you. How- I mean, how much risk is there? What do you think the measures you're taking do to offset everything else?
KELLY: I don't think the risk on- on an airplane is any greater risk than anywhere else, and in fact, you just look at the layered approach that we use. It's- it's as safe as an environment as you're going to find. We're using hospital quality disinfectants, HEPA air filters to make sure that the air is- is properly filtered and clean. We're not going- going to remove middle seats or prohibit people from sitting in middle seats. But at the same time, we won't book the airplanes full. So, you know, if you choose, all the middle seats can be open.
MARGARET BRENNAN: So I know you said at one point that- that what you're going through now was worse than after 9/11, which is extraordinary. But I mean, is the bottom line here that cheap travel is over for Americans for the future, that the business is just completely changing and that the future is uncertain?
KELLY: Well, sure, the future is uncertain. But, you know, right now we're- we're at a low point. And so I just don't think it's right to extrapolate today in- into perpetuity. So we'll get through this. But in the meantime, I think it's actually the- the opposite. After 9/11, Herb Kelleher was famous for saying that we're all low fare carriers now because that's what it's going to take to get people flying. And that is certainly the case today. And I think we're very well prepared for that. We've got a strong balance sheet. We've got a lot of cash. We've got a great business model and a low cost structure. But we're going to have to fight our way through this. And obviously, I'm anxious to see how the travel demand develops here in the summer.
MARGARET BRENNAN: It's picking up?
KELLY: Well, I- yeah. I think we've seen the bottom here in- in April. Each week after the first week of April has gotten successively better. I think May will be better than April was, and I don't think June will be a good month, but hopefully it will be a bit better than May. And then we're looking forward to July and August, and we'll just have to see. There are bookings in place. But those could easily be canceled. So it's really one day at a time.
MARGARET BRENNAN: Southwest has taken about $3.2 billion in federal aid. Do you expect to take more?
KELLY: You know, I mean, the first thing is to re- really thank the Congress, the administration, Secretary Mnuchin, Secretary Chao, because what was needed for our country was a lot of liquidity. And the CARES Act was exactly what we needed to avoid a- a really serious depression. We've applied for another government loan. I don't know that we'll take it. I think what the government has done for us with this CARES Act is it really has opened up the capital markets. A month ago, we couldn't have borrowed money, we couldn't have raised equity. And we were able to raise $6 billion last week. So I think that we've got what we need to see our way through. But if we have to seek another government loan, we will do that. We have until September to make that decision.
MARGARET BRENNAN: And we know because of the first round you took that you can't lay off anyone until after September 30. That was part of the- the CARES Act provision. I know, though, you recently told employees that if business doesn't pick up by July, that you'll become a dramatically smaller airline. What does that mean? Are you laying the groundwork for job cuts?
KELLY: Well, you know, I think you summarized it well with your- with your comments. The- the planes are virtually empty, and we've got- at Southwest alone we've got close to 400 airplanes that are parked. The- the demand is just not there. So obviously, if things don't improve, we have to downsize. We've never had a furlough in our history. We've never had a pay cut in our history. And I'm extraordinarily proud of that. And we certainly don't want to break that record. What I promised our people is I don't know what the future holds, but I do know that we're very well prepared, and the very last thing that we'll do--
MARGARET BRENNAN: Yeah.
KELLY: --is have an involuntary furlough.
MARGARET BRENNAN: Okay.
KELLY: So we'll just have to see how things play out and do our best to avoid those- those- those kinds of results.
MARGARET BRENNAN: Thank you very much for your time. We'll be back in a moment.
SOUTHWEST AIRLINES CEO GARY KELLY: Hi, MARGARET.
MARGARET BRENNAN: Is it safe to fly again?
KELLY: It is. You know, we're- we're- we're doing everything possible to encourage people to come back and fly. We're cleaning airplanes. We're requiring masks of our employees and our customers. We're using very deep cleanings every night. We're using electrostatic misters, which will kill the virus on surfaces for up to 30 days. We're exercising social distancing. And onboard the aircraft, we won't be booking airplanes full so that people can spread out. So absolutely, we're doing everything we can to make it as safe as humanly possible.
MARGARET BRENNAN: And you stopped things like food service and the like. I mean, those sound like good measures. But, you know, we had a guest on our program last week, Barry Diller, who is- is a big investor. And he said it's just absurd if you do things like remove the middle seat to have some spacing. I mean, to his point, you still have a confined space. You still have a shared bathroom. You still have people who are walking down the aisle, going to their seat, walking past you. How- I mean, how much risk is there? What do you think the measures you're taking do to offset everything else?
KELLY: I don't think the risk on- on an airplane is any greater risk than anywhere else, and in fact, you just look at the layered approach that we use. It's- it's as safe as an environment as you're going to find. We're using hospital quality disinfectants, HEPA air filters to make sure that the air is- is properly filtered and clean. We're not going- going to remove middle seats or prohibit people from sitting in middle seats. But at the same time, we won't book the airplanes full. So, you know, if you choose, all the middle seats can be open.
MARGARET BRENNAN: So I know you said at one point that- that what you're going through now was worse than after 9/11, which is extraordinary. But I mean, is the bottom line here that cheap travel is over for Americans for the future, that the business is just completely changing and that the future is uncertain?
KELLY: Well, sure, the future is uncertain. But, you know, right now we're- we're at a low point. And so I just don't think it's right to extrapolate today in- into perpetuity. So we'll get through this. But in the meantime, I think it's actually the- the opposite. After 9/11, Herb Kelleher was famous for saying that we're all low fare carriers now because that's what it's going to take to get people flying. And that is certainly the case today. And I think we're very well prepared for that. We've got a strong balance sheet. We've got a lot of cash. We've got a great business model and a low cost structure. But we're going to have to fight our way through this. And obviously, I'm anxious to see how the travel demand develops here in the summer.
MARGARET BRENNAN: It's picking up?
KELLY: Well, I- yeah. I think we've seen the bottom here in- in April. Each week after the first week of April has gotten successively better. I think May will be better than April was, and I don't think June will be a good month, but hopefully it will be a bit better than May. And then we're looking forward to July and August, and we'll just have to see. There are bookings in place. But those could easily be canceled. So it's really one day at a time.
MARGARET BRENNAN: Southwest has taken about $3.2 billion in federal aid. Do you expect to take more?
KELLY: You know, I mean, the first thing is to re- really thank the Congress, the administration, Secretary Mnuchin, Secretary Chao, because what was needed for our country was a lot of liquidity. And the CARES Act was exactly what we needed to avoid a- a really serious depression. We've applied for another government loan. I don't know that we'll take it. I think what the government has done for us with this CARES Act is it really has opened up the capital markets. A month ago, we couldn't have borrowed money, we couldn't have raised equity. And we were able to raise $6 billion last week. So I think that we've got what we need to see our way through. But if we have to seek another government loan, we will do that. We have until September to make that decision.
MARGARET BRENNAN: And we know because of the first round you took that you can't lay off anyone until after September 30. That was part of the- the CARES Act provision. I know, though, you recently told employees that if business doesn't pick up by July, that you'll become a dramatically smaller airline. What does that mean? Are you laying the groundwork for job cuts?
KELLY: Well, you know, I think you summarized it well with your- with your comments. The- the planes are virtually empty, and we've got- at Southwest alone we've got close to 400 airplanes that are parked. The- the demand is just not there. So obviously, if things don't improve, we have to downsize. We've never had a furlough in our history. We've never had a pay cut in our history. And I'm extraordinarily proud of that. And we certainly don't want to break that record. What I promised our people is I don't know what the future holds, but I do know that we're very well prepared, and the very last thing that we'll do--
MARGARET BRENNAN: Yeah.
KELLY: --is have an involuntary furlough.
MARGARET BRENNAN: Okay.
KELLY: So we'll just have to see how things play out and do our best to avoid those- those- those kinds of results.
MARGARET BRENNAN: Thank you very much for your time. We'll be back in a moment.
