Southwest Airlines said on that it expects “solid profits” in the current quarter on strong summer bookings, and flagged 20 fewer deliveries of the MAX jets this year from Boeing Co.The largest US domestic airline, which reported a first-quarter loss due to a one-time charge owed to mass cancellations in December, joins rivals in allaying fears of a slowdown in travel due to a worsening economic outlook.
“Demand for domestic air travel remains strong, thus far,” said CEO Bob Jordan, adding that cost pressures due to high labor and fuel expenses weigh on the industry.
The airline, one of Boeing’s biggest MAX customers, said it expects 70 deliveries of the 737-8 jet this year instead of the planned 90 after the US planemaker disclosed a manufacturing issue with some of the workhorse aircraft.
Delay in MAX deliveries is expected to increase operating costs for airlines and limit their ability to meet travel demand, hitting revenue.
Southwest revised annual capacity growth outlook to between 14 per cent and 15 per cent, from 15 per cent to 16 per cent forecast earlier.
The company expects “solid profits” in the second quarter as well as the full year, but did not provide specific numbers. Analysts polled by Refinitiv expect an adjusted profit per share of USD 1.05 for the second quarter and USD 2.73 for 2023.
Dallas, Texas-based Southwest also expects revenue per seat flown one mile to fall 8 per cent to 11 per cent in the quarter through June, partly due to a policy change that eliminated expiration dates on qualifying flight credits.
It reported a loss of 27 cents per share for the first quarter due to a USD 380 million pre-tax charge. “Travel demand and revenue trends in March were strong and resulted in solid profitability for the month,” Jordan added.
Revenue for the quarter through March was USD 5.71 billion, up roughly 22 per cent.