The US airline sector welcomes good news again: Southwest Airlines and American Airlines raise Q4 guidance

Zhitong
2024.12.05 14:12
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Southwest Airlines and American Airlines have raised their earnings guidance for the fourth quarter, reflecting the recovery of the U.S. travel industry. Southwest Airlines expects revenue per available seat mile to increase by 5.5% to 7%, and is optimistic about future revenue trends. American Airlines has also raised its earnings per share forecast, expecting it to reach 55 to 75 cents, exceeding analysts' expectations. These positive adjustments indicate strong demand for the holiday travel season

According to Zhitong Finance APP, following JetBlue Airways (JBLU.US), Southwest Airlines (LUV.US) and American Airlines (AAL.US) have also raised their guidance for the fourth quarter, which is a positive sign for the U.S. travel industry. Previously released data showed that the number of travelers during the Thanksgiving holiday reached a record high.

Due to strong travel trends and effective efficiency measures, Southwest Airlines has increased its revenue per available seat mile (RASM) forecast for the fourth quarter.

In a filing submitted to the U.S. Securities and Exchange Commission on Thursday, Southwest Airlines stated: “(Southwest Airlines) is encouraged by recent revenue trends and booking volumes (including holiday travel in the fourth quarter), and currently expects strong revenue trends and tactical proactive performance to continue into 2025.”

Southwest Airlines expects RASM to grow by 5.5% to 7% in the fourth quarter, up from a previous expectation of 3.5% to 5.5%. This corresponds to a year-on-year capacity decline of about 4%.

Southwest Airlines also stated on Monday that the company performed “exceptionally well” during the Thanksgiving period (November 25 to December 1), with nearly 27,000 flights and 3.5 million passengers. Proudly announcing that its on-time rate ranks among the best in U.S. domestic airlines, the airline reported the least delays of 45 minutes or more after the Christmas collapse in 2022.

According to the Transportation Security Administration, this Thanksgiving weekend set another record, with over 3 million people returning home on Sunday, about 74,000 more than the previous holiday record.

Meanwhile, American Airlines has also raised its profit expectations for the last few months of the year, anticipating stronger performance during the critical holiday travel season.

In a regulatory filing on Thursday, American Airlines stated that it expects adjusted earnings per share for the fourth quarter to reach 55 to 75 cents, up from a previous expectation of up to 50 cents. The revised range easily exceeds the average analyst expectation of 40 cents.

Additionally, due to strong year-end travel demand, JetBlue Airways updated its fourth-quarter guidance on Wednesday. The airline expects fourth-quarter revenue to decline by 2% to 5%, compared to a previous expectation of a decline of 3% to 7%; it expects available seat miles to decline by 4.5% to 6.5%, compared to a previous expectation of a decline of 4% to 7%.

On Thursday, U.S. stock futures saw the airline sector rise, with American Airlines up nearly 7%, Southwest Airlines up over 3%, JetBlue Airways and Delta Air Lines (DAL.US) up nearly 3%, and United Airlines (UAL.US) up nearly 2%

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