Photographer: Patrick T. Fallon/Bloomberg

Southwest Air Rushes to Ensure Fuel Supply Amid Storm Damage

Updated on
  • CEO sees ‘evolving crisis’ as some refineries, pipelines close
  • Jet-kerosene price surges in wake of flooding on Gulf Coast

Southwest Airlines Co., the largest U.S. airline by domestic passengers, is working to ensure a steady supply of jet fuel after Hurricane Harvey forced the shutdown of crude-oil refineries and pipelines along the Gulf Coast.

“It’s something we are concerned about and are working very aggressively to manage,” Chief Executive Officer Gary Kelly said in an interview Thursday. “I don’t expect any problem, but this is an evolving crisis.”

The rush to guarantee the fuel supply underscores the fallout on U.S. supply chains from widespread flooding in Houston and along the Texas and Louisiana coast after record rainfall. Southwest relies on the region for more than a third of its jet kerosene, although not all refineries were affected, Kelly said. Two pipelines that supply the Dallas-based carrier have been closed.

“It’s not to the point where there should be panic,” Kelly said. “The concern is along the lines of, we know there’s an issue and we have to take steps to mitigate it and that work is underway. We won’t have trouble based on what we know right now sourcing jet fuel to power our flights.”

Jet fuel for immediate delivery in New York Harbor, a benchmark for U.S. airlines, surged 16 percent to $2.12 a gallon.

Restarting Flights

“We are definitely watching this closely,” said Josh Freed, a spokesman for American Airlines Group Inc., the world’s largest carrier. “We don’t expect any immediate impact on our ability to operate our schedule. We are continuing to manage our fuel supplies and monitoring inventory levels regularly.”

Southwest will resume flights Saturday at Houston’s William P. Hobby Airport, where operations were suspended by flooding. Service will resume with 20 to 30 flights and ramp up to Southwest’s normal 120 daily departures by Sept. 9, said spokeswoman Brandy King.

“The conditions at Hobby are very good,” Kelly said. “There’s not really any wind or hurricane damage per se, it’s just obviously the heavy rains and flooding.”

Kelly said he remains wary about how many Houston residents will be able to make their way to the airport. Southwest, which has 4,100 Houston employees, will have sufficient staff at the airport and on its planes, he said.

“It’s hard to say there’s a clear path from every location to the airport,” said Chief Operating Officer Mike Van de Ven. “We’re not sure how accessible it all will be.”

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