Southwest Airlines hurt by flu outbreak

DALLAS (AP) — The CEO of Southwest Airlines says an April pickup in travel has fizzled in May, forcing the company to speed up plans to raise more revenue.

Chief Executive Gary Kelly said Wednesday that the airline has been hurt by the swine-flu outbreak, which made travelers nervous about getting on a plane.

The global economic slowdown has left Southwest uncertain what the rest of the year will bring.

“June is typically our strongest month of the year, so I think June will tell us a lot,” Kelly told reporters after the company’s annual shareholder meeting.

American Airlines’ parent, AMR Corp., also held its annual meeting a few miles away in Fort Worth. Employees challenged CEO Gerard Arpey over AMR’s reluctance to approve pay raises.

Times are tough at American, until last year the world’s largest airline, and at Southwest, which now carries more U.S. passengers than any carrier.

Both airlines have been losing money as demand for travel shrinks, and they’ve been eliminating some flights. On Wednesday, both CEOs gave guarded views of the future.

“Things are not getting worse, but they’re certainly not getting a lot better,” Arpey said.

Kelly said he didn’t see the economy rebounding anytime soon, and added that there is often a longer delay before business travel returns to pre-recession levels.

Kelly said Southwest was moving more quickly to enact revenue-raising measures, which he declined to detail. He wouldn’t rule out fees, even though Southwest advertises that it doesn’t charge “hidden fees,” which Kelly explained meant charges for checking one or two pieces of luggage and other levies that customers dislike.

Southwest is testing in-flight Internet access, for which it would charge a fee, and it will tinker with its fares. Kelly suggested that the airline will be more aggressive about lowering some fares in specific markets, although he gave no details.

“We’re preparing ... for a sustained recessionary environment where low fares will be needed and will carry the day,” he said.

Southwest announced Wednesday that it would begin service later this year to Milwaukee, bringing to four the number of new points on its route map in 2009. The airline began flying to Minneapolis in March and plans to add New York’s LaGuardia Airport and Boston later this year.