LUV stock was trading at $35.65 in pre-Market 08:56 AM EDT
The market seemed to adore the earnings reported by Southwest Airlines ( NYSE:LUV ) on Thursday during premarket hours. The Texas-based airline reported $6 billion in overall revenue for the third quarter, below a forecast of $6.22 billion, falling short of sales expectations despite setting a new record for the firm. However, the $0.50 per share reported was more than the $0.42 benchmark established by Wall Street. Additionally, CEO Bob Jordan expressed sustained optimism about travel trends until the end of 2022, despite high inflation.
He stated on Thursday that “revenue trends were solid in September 2022, buoyed by strengthening corporate travel trends post-Labor Day,” following record summer leisure travel demand. “Despite lesser capacity, leisure and business demand remain strong, and we presently estimate revenue trends to improve sequentially from the third to the fourth quarter of 2022.”
Southwest Airlines performance
According to management, operating revenue in Q4 could increase by 13% to 17% from the same period in 2019, while available seat miles should be within 2% of 2019 levels. Continued by saying that the airline’s fuel-hedging policy has been successful and would likely continue to shield the carrier’s bottom line through 2023. In 2023, operating costs are projected to drop year over year as pilot personnel shortages are forecast to alleviate, and capacity is projected to rise.
Despite operating at subpar productivity levels and facing considerable inflationary cost pressures, Jordan said, “We continue to perform effectively against our full year 2022 non-fuel cost guidance. In the fourth quarter of 2022, “we expect to earn excellent profits and margins, based on existing trends and barring any substantial unforeseen occurrences,” the company is still committed to keeping up its current momentum.
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