Southwest Airlines has lowered expectations for first-quarter 2024 operating revenue per seat mile (RASM) from an increase of 2.5% to 4.5% to flat to up 2%. The airline expects capacity to rise around 11% up from previous guidance of 10%.
Fuel cost expectations are also up with Southwest now predicting fuel costs per gallon of $2.95 to $3.00 from $2.70 to $2.80. Expenses are now expected to be at the high end of the range of 6%. The airline now expects to make $7 million in schedule debt repayments, whereas previously it said there would be none.
Southwest says its first quarter operational performance has been “strong, thus far” with flight cancellations lower than expected in late January when the last set of guidance figures were published. Since February 1, Southwest’s completed factor averaged 99.3%.
Southwest noted that demand remains stable and that network adjustments were accretive, with bookings for the second quarter reported to be currently “ahead of seasonal trends” adding that the company now expects to deliver “all-time record operating revenues for the quarter”.
In an effort to offset inflationary cost drivers, Southwest said that it had halted hiring class for “multiple workgroups, including pilots and flight attendants” and expects to end the year with a lower headcount on a year-over-year basis. Even though the company expects a net loss for the first quarter, Southwest reiterates its confidence of returning to profitability in March 2024.
Southwest is now expecting to receive from Boeing 46 737-8 deliveries in 2024, down from previous expectations of 79 MAX aircraft, including 58 –8s. Southwest says that it no longer expects to take delivery of any –7s due to the current certification status of the aircraft type. With a “fluid” delivery schedule from Boeing, Southwest says that it expects to reduce capacity and re-optimise schedules for the back half of 2024, which means the airline is currently reassessing guidance for full year 2024.
Southwest lowers revenue expectations for first quarter
