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Southwest Airlines says travel demand is improving, forecasts fourth quarter profit

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Southwest Airlines on Wednesday said it expects to be profitable in the fourth quarter, thanks to stronger-than-expected leisure travel demand despite the emergence of the omicron variant of Covid.

Fourth-quarter revenue for the Dallas-based airline is forecast to drop 10%-15% from its previous period in 2019, which saw it generate $5.73billion. Southwest slightly reduced its fuel-cost forecast to less than $2.25 per gallon for the quarter, from an earlier range of $2.25-2.35 per gallon.

Southwest’s projections are ahead of Wednesday’s Investor Day presentation. According to the airline, 2022 will be a profitable year. It estimates that its capacity can decline between 2019 and 2020, and could experience 2% growth. Prices, including fuel, may rise up to 11% over 2019.

Airline is currently on a hiring spree. It aims at adding some 8,000 workersThis year we have an additional 5,000 employees.

Because Southwest is based in the United States and has thus been less exposed to the dozens of travel restrictions implemented by governments since last month’s detection, the network at Southwest is more protected from these new restrictions.

Willie Walsh was the director general for the International Air Transport Association. He stated that while the travel restrictions in the wake of omicron (which range from new testing requirements to bans on foreigners) will most likely affect demand in the short-term, it’s still too early to determine the effects.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.