Southwest raises Q2 revenue forecast on travel demand

SOUTHWEST Airlines on Thursday (May 26) raised its second-quarter operating revenue forecast, as strong travel demand puts US carriers on a fast track to recovery from pandemic lows.

Shares of the airline were up nearly 3 per cent before the bell.

“The company continues to experience strong load factors and an acceleration in bookings for summer travel,” Southwest said in a regulatory filing.

US airlines have been buoyed — and in some cases, surprised — by how quickly travel snapped back from the depths of the Covid-19 pandemic, leaving them struggling to add capacity, in part due to staff shortages.

The demand has been such that airlines have been able to allay fears of higher fuel prices due to the war in Ukraine by raising ticket prices, though a rise in inflation has led to concerns on whether travel demand will take a hit.

“The improvement in the company’s second quarter 2022 operating revenue guidance is primarily attributable to continued passenger yield strength,” Southwest added.

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The carrier expects economic fuel costs per gallon for the second quarter to be US$3.30 to US$3.40, up from for its earlier forecast of US$3.05 to US$3.15.

Texas-based Southwest added it is on track to report “solid profits” for the quarter and for the rest of 2022.

The carrier said it now expects current-quarter operating revenue to rise 12-15 per cent versus pre-pandemic levels. It had earlier forecast an 8-12 per cent rise. REUTERS