Sept 6 (Reuters) – Southwest Airlines Co (LUV.N) on Wednesday warned of weak leisure bookings in August, joining two other U.S. airlines in the third quarter due to higher oil prices. warned of rising fuel costs.
The nation’s largest airline said August bookings were at the lower end of expectations, due in part to seasonal trends, but maintained its view that overall leisure demand and yields remain healthy. did.
Southwest stock fell 2.6% to close at $29.97.
The forecast comes as inflationary pressures are hitting consumers and there are early signs of weakening domestic travel demand, even as airlines strike out big contracts to retain workers. It was announced in
United Airlines (UAL.O) and Alaska Airlines Group (ALK.N) also warned of higher fuel costs this quarter after oil prices rose for the third straight month in August on signs of tight supplies.
United Airlines said in a regulatory filing that jet fuel prices have increased more than 20% since mid-July.
The company also said it has no immediate plans to move its headquarters from Chicago to Denver after purchasing 113 acres of land there. TD Cowen Transportation Council Finance Director Gerald Lederman said a top priority is expanding the flight training center in Denver.
Southwest Airlines said it still expects “strong (third-quarter) earnings,” but compared with a 3% to 7% decline in revenue per available seat mile, a measure of pricing power. The rate was lowered to 5-7%. Previous % drop forecast.
Alaska Airlines now expects quarterly adjusted pre-tax margins to be 10% to 12%, lower than previously expected 14% to 16%.
U.S. airlines typically do not hedge their fuel costs, making them more susceptible to price fluctuations.
“The relatively rapid rise in fuel prices has left the industry with little time to respond through freight rates,” Citi Research analyst Stephen Trent said in a note.
Reporting by Mehr Bedi and Abhijith Ganapavaram in Bengaluru, additional reporting by Aishwarya Jain.Editing: Pooja Desai
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