U.S. carriers lifted revenue outlook for Q1 2022

U.S. carriers on Tuesday Mar. 15 lifted revenue outlook for the quarter through March as falling COVID-19 cases drive up travel demand, but trimmed their capacity plans in response to higher fuel costs.

Atlanta-based Delta Air Lines Inc said last week it saw the highest ticket sales in the company’s history due to an “unparalleled” increase in demand.

“We’ve not seen a stronger demand … in my career,” Chief Executive Ed Bastian said.

Rival United Airlines Holdings said leisure demand is “very strong” and business traffic is rebounding more quickly than expected.

Shares of major U.S. airlines were up between 5% and 10% in midday trade.

Carriers are counting on strong demand to deal with fuel costs, which have surged after Russia’s invasion of Ukraine, which Moscow has termed a “special military operation.”

Fuel is their second-biggest expense after labor, but major U.S. airlines do not hedge against volatile oil prices like most European airlines. The industry typically looks to offset fuel costs with higher fares.

Tammy Romo, chief financial officer at Southwest Airlines, told an investor conference that the pricing environment has been healthy. The Texas-based carrier has raised its fares. Reuters.com