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Southwest Gains as It Sees Q4 Profit on Travel Boom, Higher Fares
Published Dec 08, 2021 11:31AM ET
© Reuters.
By Dhirendra Tripathi
Investing.com – Southwest Airlines stock (NYSE:LUV) rose 2.1% on Wednesday as the carrier said stronger travel demand and fares will bring it back to profitability in the current quarter, a sharp turnaround for a company that less than two months ago reported a loss for the third quarter and said the fourth would be no different.
The company said its “goal is to be solidly profitable in 2022, including all quarters”. It said incremental benefit from its new Chase co-brand agreement is also helping its topline.
The company also revised its revenue guidance for October through December, and now expects operating revenue to be down 10% to 15% compared with the 2019 quarter, a pre-pandemic time. The previous guidance called for an erosion of 15% to 25%.
Southwest said leisure travel demand was strong for the Thanksgiving holiday. Based on current trends, leisure bookings continue to come in above expectations for December travel, and managed business revenue is expected to recover to down 55% to down 60% in December versus 2019 levels, the U.S.-focused carrier said.
After an initial scare owing to Omicron, people are mostly sticking to their travel plans, encouraged by governments resisting lockdowns. The airline, leisure and travel industry were among the hardest hit in the pandemic. But with a few billion people vaccinated and greater understanding of the treatment, people are now taking to travel.
Southwest also slightly lowered its fuel-cost forecast for the quarter to no more than $2.25 a gallon, down from the $2.25 to $2.35 range it guided earlier.
The airline published its forecast ahead of investor day presentations.
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