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(Reuters) -Southwest Airlines Co on Thursday forecast “solid” profit for the current quarter and said quarterly revenue would surpass pre-pandemic levels on surging travel demand, sending its shares higher.
The company said it turned a profit in the month of March and expects to be “solidly profitable” this year despite higher fuel and labor costs.
Southwest’s shares were up 2.2% at $46.97 in morning trade.
The airline reported a wider-than-expected adjusted loss in the first quarter due to flight cancellations and staff shortages. The airline had in January canceled more than 5,600 flights and roughly 10% of its workforce contracted the coronavirus.
Southwest said a sharp recovery in travel bookings in March helped lift its monthly revenue above 2019 levels for the first time since the onset of the pandemic. In April, too, leisure bookings for spring and summer travel remained “strong”, it said.
It expects an 8%-12% increase in revenue in the quarter through June compared with the corresponding period in 2019. Capacity during the quarter is projected to be down 7%.
The Texas-based company, however, plans to increase short-haul trips this quarter in markets which are expected to see higher demand for business travel.
Southwest is the latest carrier to sound upbeat about travel demand.
American Airlines (NASDAQ:AAL) Group, United Airlines, and Alaska Air (NYSE:ALK) Group Inc last week said their revenue in the current quarter would surpass pre-pandemic levels even as their capacity remains below that of 2019.
“Air travel demand is on the rise and pricing power has returned to the industry, leading to a strong revenue outlook,” said Peter McNally, vice president and global sector lead at research firm Third Bridge.
Booming consumer demand is helping carriers deal with soaring fuel costs, which have more than doubled in the past year.
Fuel is the industry’s second-biggest expense after labor, but major U.S. airlines do not hedge against oil prices.
Southwest Airlines (NYSE:LUV), however, said its multi-year fuel hedging program has helped it offset increases in jet fuel price in the first quarter of this year.
Adjusted loss for the first quarter came in at 32 cents a share, compared with an analysts’ expectations of a loss of 30 cents per share, according to Refinitiv data.
