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Southwest Gains as It Sees Q4 Profit on Travel Boom, Higher Fares -Breaking

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By Dhirendra Tripathi – Southwest Airlines stock (NYSE:) rose 2.1% on Wednesday as the carrier said stronger travel demand and fares will bring it back to profitability in the current quarter, a sharp turnaround for a company that less than two months ago reported a loss for the third quarter and said the fourth would be no different.

The company said its “goal is to be solidly profitable in 2022, including all quarters”. The company said that incremental benefits from the new Chase cobrand agreement are also improving its bottom line.

In addition, revenue guidance was revised by the company for October and December. The current outlook is that operating revenues will fall 10% to 15% from the 2018 quarter. This pre-pandemic period. The prior guidance had called for a 15%- 25% erosion.

Southwest stated that leisure travel was in high demand for Thanksgiving. The U.S.-focused carrier stated that leisure travel bookings have been rising above expectation for December and that managed business revenue should recover to 55%-60% in December.

Omicron caused panic but most people continue to plan their trips, which is encouraged by government lockdowns. Travel, leisure and the airline industry were the most affected by the pandemic. With a few hundred million people now vaccinated, and a better understanding of the disease treatment, more people can travel.

Southwest slightly reduced its quarter-end fuel-cost forecast to less than $2.25/gallon from the previous range (2.25-2.35).

Prior to investor-day presentations, the airline had already published their forecast.

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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.