What Southwest Airlines Predicts for Fourth Quarter

Southwest Airlines is predicting higher fourth-quarter revenue after beating profit estimates for the third quarter.

The airline revealed strong leisure travel demand helped revenue climb, and with no signs of easing despite economic worries, Southwest expects operating revenue to jump 13 percent to 17 percent in the current quarter versus 2019.

“We are pleased to report solid third quarter 2022 profits and record third quarter operating revenues,” Southwest CEO Bob Jordan said. “Following record summer leisure travel demand, revenue trends remained strong in September 2022, bolstered by improving business travel trends post-Labor Day.”

The carrier’s operating revenue for the third quarter was $6.22 billion, up slightly from analysts’ expectations of $6.21 billion. While demand remains strong, higher fuel and wage costs are causing airfare prices to soar.

Southwest officials said the company expects strong demand trends to continue into 2023, with around 90 percent of its route network to be restored by next summer. The airline’s flights will be 100 percent restored by December 2023.

“Leisure and business demand remains strong, and we currently expect revenue trends to improve sequentially from third quarter to fourth quarter 2022, despite lower capacity,” Jordan continued. “Our fuel hedging strategy continues to provide protection against persistently high jet fuel prices, and we are 61 percent hedged in fourth quarter 2022 and 50 percent hedged in full year 2023.”

The carrier also revealed its cost per available seat mile, excluding fuel, would increase between 14-18 percent in the fourth quarter, compared to the same period in 2019.