Southwest says leisure airfares near pre-pandemic levels but flags rising jet fuel prices


Southwest Airlines said travel demand continues to improve with booking patterns for next month looking “fairly typical” as the impact of Covid-19 in the U.S. wanes.

The Dallas-based airline said leisure fares next month are getting close to 2019 levels, though a lack of business travelers will still still keep a lid on average ticket prices this quarter.

But Southwest also flagged the rise in jet-fuel costs for the quarter, which could weigh on its bottom line.

The carrier will hold an annual shareholder meeting at 11 a.m. ET.

Southwest said June revenue will likely be down 20% to 25% compared with the same month of 2019, an improvement from this month, when it expects sales to be off by as much as 40% from two years ago.

“Passenger demand and booking trends remain primarily leisure-oriented and inconsistent by region,” Southwest said in a filing. “Despite recent improvements in leisure demand, the company remains cautious and continues to plan for multiple fleet and capacity scenarios.”

Southwest expects its May capacity to be up 126% from last year but down 18% from two years ago, and for June, it forecast it will fly 67% more compared with 2020 and 6% less than 2019.

The low-cost airline reiterated that it expects to get to breakeven core cash flow in June 2021, trimming its core cash burn to $1 million to $3 million a day on average for the second quarter from a previous estimate for $2 million to $4 million a day.

Southwest shares were down 2.5% in morning trading during a broad market sell-off.

Airlines have been adding flights and resuming hiring plans to cater to returning travelers this spring and summer, generally carriers’ most profitable seasons. Southwest is planning to resume hiring flight attendants in the coming weeks, CNBC reported this month.

Leave a Reply