Earnings Report: Southwest Loses BIG With 737 MAX Fiasco — Is the Rapid Rewards Program Preparing for Devaluation?

July 26, 2019 By Joseph Hostetler

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INSIDER SECRET: You can earn 66% of the points you need to receive the Southwest Companion Pass by opening a single card. I’ll show you!

Southwest has just released its second quarter 2019 earnings report, and it’s an interesting one.

There are a few bombshell announcements in there, such as:

Southwest will no longer service Newark as of November 3, 2019
Service to Cozumel will begin in Q1 of 2020
Southwest will outline new destinations to Hawaii next month (including flights to Kauai and the island of Hawaii)

You may be itching to know the overall health of the company. The airline is still experiencing the pangs of the 737 MAX groundings earlier this year, which “reduced operating income an estimated $175 million in second quarter, alone,” per CEO Gary Kelly. That’s a big deal.

What does all this mean for Southwest, and for the points you’ve been frantically amassing for your free trip to Hawaii??

Southwest had some major setbacks this quarter, but there’s no need to worry about the well being of your Southwest points! (Photo by Joseph Hostetler/Million Mile Secrets)

Southwest Second Quarter Revenue and Earnings Report — Mostly Good News

Yes, the airline has probably lost hundreds of millions of dollars due to the 737 MAX debacle. Yes, there were significant expansion delays to Hawaii because of it. True, Southwest won’t meet their original goal of growing capacity by ~5% year-over-year.

But somehow, Southwest continues to thrive. Gary Kelly states:

Second quarter 2019 unit revenues grew 6.8 percent, year-over-year. We benefited from a healthy revenue environment and strong performances from our award-winning Rapid Rewards^®loyalty program and ancillary boarding products.

Southwest’s profits soar despite 737 MAX issues. Q2 total operating revenues increased 2.9% year-over-year, achieving a record high of $5.9 billion. Pretty amazing, isn’t it?

That’s what happens when you’ve got hands-down the most customer friendly policies, like two free checked bags and free changes and cancellations up to 10 minutes before takeoff. They also offer the Southwest Companion Pass, which lets you bring a friend or family member for (almost) free every single time you fly Southwest. Even if you fly every single day!

You can read more about the Southwest Companion Pass here.

A giving approach like Southwest’s in the airline industry will produce unconditional loyalty from millions upon millions of travelers. Most of us at MMS will always fly Southwest when given the option.

When an airline suffers, you may worry that the loyalty program will become less generous. But Kelly credits a large part of Southwest’s resilience to the Rapid Rewards loyalty program. Southwest points are in no danger of taking a hit because of recent misfortunes.

If you’re a Southwest fanatic like we are, here’s some additional reading to learn fun tips and tricks:

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Joseph Hostetler

Writer

Joseph Hostetler is a full-time writer for Million Mile Secrets, covering miles and points tips and tricks, as well as helpful travel-related news and deals. He has also authored and edited for The Points Guy.