Southwest Airlines lifts unit revenue forecast as holiday travel off to strong start

(Reuters) -Southwest Airlines raised its forecast for fourth-quarter revenue per available seat mile on Thursday, betting on a domestic travel demand rebound during the holiday season and improved pricing.

Shares rose nearly 3% before the bell after the budget carrier also said it was encouraged by recent revenue trends and forward bookings.

Meanwhile, American Airlines (NASDAQ:AAL ) also lifted its fourth-quarter adjusted earnings and total revenue per available seat mile forecast, sending its shares up nearly 7%.

The U.S. Transportation Security Administration has said it screened 3.08 million airline passengers on Sunday, the highest number ever on a single day.

Airlines for America had projected U.S. carriers would fly more than 31 million passengers over the holiday period, up from nearly 29 million passengers during the same period in 2023.

Southwest has rolled out a series of efforts over the past year to help reinvigorate demand, including partnerships, seats with more legroom for customers and aircraft sale leasebacks.

The airline has struggled to find its footing after the pandemic, in part due to Boeing (NYSE:BA )'s aircraft delivery delays and industry-wide overcapacity in the domestic market.

Southwest said on Thursday it continued to see about 20 Boeing 737-8 jet deliveries this year and expects to retire roughly 40 older 737 models from its fleet.



The carrier now expects its fourth-quarter RASM, a proxy for pricing power, to be up between 5.5% and 7%, compared with its prior expectation of between 3.5% and 5.5%.

It expects economic fuel costs per gallon to fall in a range of $2.35 to $2.45 for the current quarter, compared with its previous forecast of $2.25 and $2.35.

Source: Investing.com