Southwest Airlines has tons of cash, not a lot of debt, and a new view on economics of on-time performance. They’re not rushing back the 737 MAX. And they shared interesting data on the financial performance of Rapid Rewards, how business travel is doing, and explained the financial reason blocking middle seats made sense before but no longer does.

These items and more were among the 13 most interesting tidbits gleaned during the airline’s earnings call.

1. They’re flush. Southwest has “3 years of cash” and they “can borrow more” if they have to. They declined to take CARES Act subsidized loans, and haven’t yet mortgaged their frequent flyer program. They’re holding $15.6 billion including their revolving credit line, which is as much as American Airlines has on four times as much debt, and having leveraged AAdvantage.

2. They’re happy with the operation. They’ve been running 94% on time, only had 2 lost bag claims per 1000 and are running with an 80.7% net promoter score.

3. They’ve learned that being on-time is financially good. They ” used to think” it was an “optimal cost profile” to have on time performance in the low 80s. Late flights are costly, not least of which because of missed connections and misdirected bags. But it can be expensive to ensure on time performance too (maintenance, spare aircraft). Now they think their optimal on time performance is in “the high 80s.”

4. They’re not rushing back the MAX whereas American plans to operate 737 MAXs in commercial service before the end of the year, they anticipate 3-4 months from ungrounding to return to commercial service.

5. People are booking much closer to travel than usual because of the uncertainty driven by Covid. Their bookings are mostly being made within 21 days, though more passengers are booking farther out for the holidays. In fact holiday booking load factors this far out are similar to past years (albeit with much less flying).

6. Blocking middle seats cost them almost nothing to do. In July and August there was “minimal impact” from blocked middle seats, limiting the number of seats they sold on each flight. In September they think it cost them $20 million in lost revenue they didn’t make up with passengers booking other flights. And they expect it to be $20 million again in October.

7. The reason they’re going to stop blocking middle seats on December 1: they expect a cost of $40 to $60 million for the month of November. With the holidays they aren’t in a position to add flights as they hit load factor caps.

8. Their credit card is still doing well while Rapid Rewards revenue was down 43% year-over-year in the third quarter, their co-brand card was down just 12% (still a bit more than Delta reports). Cardholder acquisitions were down due with fewer airline customers as well as tighter approval standards. Cardmember attrition was about normal, not up because of loss of interest in travel.

9. Businesses are traveling again. Southwest’s large domestic focus helps here. They noted that over 90% of their large corporate travel accounts are traveling in some amount, i.e. not banned across the board.

10. But they do see the potential for ‘structural adjustment’ to business travel going forward even after the pandemic 10% – 20% of business travel might never come back, meaning it will take more years of growth to get back to 2019 levels.

11. They’re going to have a bigger cost advantage over airlines that furloughed workers United and American will have crew at the top of the pay range staffing all of their flights, while Southweest will see a $500 million annual run rate of savings starting in 2022 from voluntary early outs as well as up to $600 million in total savings between 2022 and 2025 from their extended emergency time off program (if they don’t insist on those employees returning early).

12. There were even more goodies in the CARES Act than I thought Southwest will get tax refunds for prior year taxes paid based on 2020 losses. (And don’t forget that the 7.5% excise tax on domestic air travel was suspended this year.)

13. Why Houston Intercontinental and Chicago O’Hare, and why now? Houston’s growth has been to the North of the city, so they’re going where the passengers are by re-entering Houston Intercontinental. In Chicago they’re maxed out at Midway airport and can no longer grow there, so adding O’Hare is the only way to grow. The pandemic makes gates available, and “if we don’t move now we risk never getting in there.” Plus they have planes that aren’t being utilized now.

The airline makes a strong case that they’re well-positioned to outcompete other U.S. domestic carriers. And the pandemic clearly means that airlines aren’t ‘maxed out on growth opportunities’ since they’re all now growing back from 50% or 65% of prior year flying.