Southwest Airlines (LUV) yesterday announced discounted fares for winter travel. The discounts were offered in order to increase travel to make up for the lost revenue due to the recession.
 
Southwest has been hit hard by slowing demand due to the recession and volatile fuel prices. As a part of its cost-cutting initiatives, the company has cut its capacity along with downsizing employees.
 
The air carrier is scrambling to fill its seats this winter by offering big fare discounts. The discounted fares will be offered on travel any day except Fridays and Sundays from Oct. 13 through Feb. 11. The company also said that travel to some destinations would start at $59 each way however seats for such offer are limited.
 
However, the sale prices are higher than they were for other recent Southwest promotions and up to 50% higher than during a big fare sale this summer. The airline is increasing fares to make up for the downturn in business travel and the revenue it leaves behind by not charging baggage fees.
 
Though the fall in the number of passengers flying business and first class is showing signs of stability, the company does not expect revenues to improve at least until the end of 2009.
 
During July the airline reported second quarter operating profit of 8 cents per share, down from 16 cents per share in the prior-year quarter. Demand for business travel remains weak, management continues to stimulate traffic with more discounted and promotional fares. Unless the demand rebounds significantly, third quarter 2009 unit revenues are expected to decline more on a year-over-year basis, compared to the second quarter decline.
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