Southwest posts record 3Q revenue as summer travel returns
Oct 27, 2022, 4:17 AM | Updated: 6:52 am
Southwest posted record operating revenue in its third quarter as travelers returned in force over the summer.
Operating revenue totaled $6.22 billion, up 10% from the prior year’s $5.64 billion, the company said Thursday. However, this was shy of the $6.23 billion that analysts polled by Zacks Investment Research.
Fuel costs were $3.34 per gallon.
CEO Bob Jordan said that revenue trends stayed strong in September, even as the busy summer travel season wrapped up with business travel picking up after Labor Day.
Jordan said the company anticipates revenue trends to improve from the third to fourth quarters as leisure and business travel remaining strong in an environment of lower capacity.
Southwest expects first-quarter capacity to rise about 10% and second-quarter capacity to increase approximately 14% year over year, Jordan said,
Southwest expects to be able to offer more flight options to travelers next year. Jordan said the company anticipates its route network will be approximately 90% restored by the summer, and fully restored by December 2023, compared with pre-pandemic travel.
Southwest Airlines Co. earned $277 million, or 44 cents per share, in the quarter. Stripping out certain items, earnings were 50 cents per share. This handily topped the 41 cents per share Wall Street was looking for.
Shares rose more than 3% before the market open.
Southwest is the last large U.S. airline to report third-quarter results. The other posted strong profits and surging revenue as air travel rebounded and fares were pushed higher by a shortage of seats — airlines still haven’t restored all the flights that they cut in the early days of the pandemic.
Southwest was a big beneficiary when travel began picking up. Most Americans stuck to domestic trips while international travel was restricted. Now, however, lucrative foreign travel is starting to boom, and that is likely to help American, Delta and United more than the Dallas-based low-cost carrier.
Like all airlines, Southwest faces rising costs. Jet fuel is up sharply from 2019, and a labor shortage is emboldening unions to seeking big pay raises.
This week, Southwest reached a tentative agreement with the union representing about 8,000 customer-service workers that includes raises of up to 25% over four years. The same workers voted down smaller raises in May. Pilots are also negotiating a new contract.
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