Southwest predicts third-quarter revenue above pre-pandemic levels
2022.07.28 14:50
FILE PHOTO: A Southwest Airlines Boeing 737-800 plane is seen at Los Angeles International Airport (LAX) in the Greater Los Angeles Area, California, U.S., April 10, 2017. REUTERS/Lucy Nicholson/File Photo
(Reuters) – U.S. carrier Southwest Airlines (NYSE:LUV) Co on Thursday predicted that its third-quarter revenue will exceed pre-pandemic levels on strong travel demand during the summer, but warned of capacity constraints for the rest of the year.
The Texas-based airline expects operating revenue for the quarter through September to rise 8% to 12% compared to the same period in 2019, though capacity growth is expected to be remain flat.
As more people start to fly for holidays as well as for work, U.S. airlines are enjoying their strongest travel season in recent years even though they are hamstrung by labor shortage and higher fuel cost going into the second half of 2022.
“We experienced inflationary pressures and headwinds from operating at suboptimal productivity levels in second quarter, which we expect will continue in second half 2022,” Southwest Chief Executive Bob Jordan said.
Southwest, which has been protecting itself from volatile oil prices through hedging, reaffirmed its goal of being “solidly profitable” for the full year.
The carrier, which has stepped up hiring, said it would slow the pace in the second half, in line with other U.S. companies amid growing economic uncertainty.
Southwest said 2022 capacity, or available seat miles, is expected to be down about 4% compared with 2019, as jet deliveries from Boeing (NYSE:BA) Co are expected to be lower than prior forecast.
Boeing, which flagged “real constraints” in supply chain on Wednesday, is expected to handover 66 jets this year compared to a previous goal of 114, Southwest said.
Southwest does not expect any deliveries of the 737 MAX-7 this year, which is yet to be certified by U.S. regulators.
The airline’s second-quarter revenue rose 68% to $6.73 billion from last year. Net income more than doubled to $760 million.
