Travel Demand Boosts Southwest Airlines’ Fourth-Quarter Profit
U.S. budget carrier Southwest Airlines has reported a stronger-than-expected fourth-quarter profit, thanks to robust travel demand and higher airfares. The airline’s adjusted profit per share stood at 56 cents, beating analysts’ estimates of 44 cents.
Operating revenue rose 1.6% to $6.93 billion, compared to the previous year. Southwest’s improved profitability is attributed to the airline’s tactical initiatives, which include introducing vacation packages and aircraft sale-leasebacks.
CEO Bob Jordan attributed the positive results to the airline’s “constructive demand environment and industry backdrop.” Jordan also highlighted that the company is expecting better-than-expected unit revenue (RASM) in the first quarter, with an anticipated growth rate of 5% to 7%.
Airfares rose at their fastest pace in 21 months, driven by the reduction in capacity and increased demand. The airline also expects to see a moderate increase in its cost per available seat mile, excluding fuel, of 7% to 9% in the first quarter, due to higher labor expenses.
Southwest Airlines has plans to receive 38 737 MAX 8 aircraft from Boeing in 2025, aiming to expand its all-Boeing fleet.
