American, Southwest Lift Q4 Forecasts On Strong Demand
American Airlines and Southwest Airlines both raised their fourth-quarter revenue forecasts on Thursday, signaling that strong demand and strategic network adjustments are paying off. The upbeat outlook sent shares of both carriers higher, reflecting investor confidence in the airlines’ ability to capitalize on a robust travel environment heading into the holiday season and beyond.
In a regulatory filing, Southwest Airlines said it now expects its fourth-quarter unit revenue to increase by 5.5% to 7% compared with the same period last year. This revision marks an improvement from its previous forecast, which capped growth at 5.5%. Southwest attributed the upgraded outlook to ongoing network refinements aimed at eliminating unprofitable flights, as well as strong traveler demand that appears poised to continue into 2025. The airline noted that its efforts to enhance route efficiency and strategically match capacity with passenger demand have made a tangible difference to its bottom line.
Southwest also revealed plans to complete its first sale-leaseback transaction in the first quarter of 2025. Sale-leaseback deals involve selling aircraft to a third party and then leasing them back, allowing airlines to improve liquidity and better manage their fleets. Such a transaction can help Southwest maintain flexibility in its operations and potentially fund other strategic initiatives as it continues to adjust its network.
American Airlines similarly raised its guidance for the fourth quarter. The carrier now projects unit revenue to be flat or increase by as much as 1% compared with the fourth quarter of 2023. This is a notable reversal from its earlier forecast, which indicated a potential decline of up to 3%. In addition, American boosted its adjusted earnings estimate to a range of $0.55 to $0.75 per share, surpassing its previous forecast of $0.25 to $0.50 a share. These positive revisions underscore the airline’s success in capitalizing on strong market conditions and increasing fares where appropriate.
Beyond revenue figures, American Airlines also announced that it has selected Citi as its sole credit card provider, ending its partnership with Barclays. This long-anticipated decision is expected to streamline American’s co-branded credit card offerings and potentially drive more value from its loyalty programs over the long term.
The optimism among major U.S. carriers extended beyond American and Southwest. A day earlier, JetBlue Airways raised its own fourth-quarter revenue forecast and informed employees that it would continue to refine its route network. This includes reducing unprofitable flights and adjusting its transatlantic offerings for summer 2025 to improve overall performance. These efforts are part of a broader industry trend of airlines fine-tuning their operations, focusing on the most profitable routes, and strategically deploying aircraft to meet evolving demand patterns.
The news that multiple airlines are raising their forecasts and making strategic adjustments suggests that the U.S. aviation industry is in a strong position, thanks to sustained traveler demand and effective network management. As the global travel market continues to recover, these carriers appear well-positioned to boost profitability, satisfy shareholders, and provide travelers with a range of convenient options in the coming months and years.
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Sources: AirGuide Business airguide.info, bing.com, cnbc.com