Southwest Airlines predicts strong fourth quarter revenue thanks to resilient travel demand

© Stocksak. FILE PHOTO: Southwest Airlines Boeing 737-880 plane seen at Los Angeles International Airport, California, U.S.A., April 10, 2017. Picture taken April 10, 2017. REUTERS/Lucy Nicholson

(Stocksak) – Southwest Airlines(NYSE:) Co Thursday forecast a greater fourth-quarter revenue as the U.S. carrier benefited strongly from leisure travel demand that is showing no signs easing in the face o economic worries.

The company stated that it expects operating revenues to increase by 13% to 17% in this quarter compared to 2019, but it expects to have approximately 2% less capacity.

“We expect revenue trends will improve sequentially between third quarter and fourth quarter 2022, even though we have lower capacity,” Bob Jordan, Chief Executive Officer, stated in a statement.

Major U.S. carriers are experiencing the strongest consumer demand in three decades, but the airline sector is facing higher fuel prices and wage bills amid fears that consumers will reduce travel spending due to the recession.

Jordan stated that “the company continues to experience inflationary costs pressures in fourth quarter 20,22, in particular with higher labor, benefits, or airports rates.”

The Dallas-based company stated that it expects strong demand trends for 2023. However, it warned that its fleet utilization will be limited due to industry-wide pilot shortages.

According to the company’s July statement, it was on track for hiring more than 1,000 pilots in this year’s season and plans to hire about 2,200 in next.

Southwest stated that it is continuing to work with Boeing (NYSE 🙂 to finalize 2023 plane delivery plans and that it expects delivery delays to continue into 2024.

According to the airline, its route network will be restored at 90% by the summer 2023 and fully restored by December 2020, compared to 2019 flight levels.

The carrier expects that its cost per seat mile, including fuel, will increase between 14%-18% in the fourth quarter compared to the same period of 2019.

Southwest reported third-quarter operating revenues of $6.22 trillion, a 10.3% increase compared to the same period last year.

The carrier reported net income of $277million, or 44 cents per share, compared with $659million, or $1.23 a share, in third quarter 2019.

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