Southwest Reports ‘Resilient Travel Demand’ as it Boosts Revenue Guidance
Skift Take
Key Points
- Southwest Airlines increased its revenue guidance for the fourth quarter of 2024, citing resilient travel demand and internal efficiency measures.
- The airline has introduced changes such as assigned seating, partnerships, and red-eye flights to enhance profitability and efficiency.
- JetBlue also improved its financial outlook following higher-than-expected bookings after the U.S. presidential election.
Summary
Southwest Airlines has raised its revenue guidance for the fourth quarter of 2024, attributing the improvement to strong travel demand and enhanced internal efficiencies. The airline is implementing strategic changes, including assigned seating and red-eye flights, to boost profitability. Similarly, JetBlue has revised its revenue expectations upwards due to better-than-anticipated bookings following the U.S. presidential election.
After a rocky 2024 dominated by a new activist investor, Southwest Airlines appears to be ending the year in better than expected shape. On Thursday, the low-cost carrier boosted its guidance for the current quarter.
In a regulatory filing, it cited “resilient travel demand” coupled with internal efficiency measures as key factors. The Texas-based operator now expects unit revenues to rise somewhere between 5.5% and 7% in the fourth quarter. This is comfortably up from the earlier figure of 3.5% to 5.5%.
“The company is encouraged by recent revenue trends and forward bookings, including fourth quarter holiday travel, and currently expects strong revenue trends and tactical initiative performance to carry into 2025,” Southwest said in the filing.
The developments follow an investor day held by the airline in late September. Southwest executives rolled out a set of changes to the carrier’s business model and made a case for the current leadership team to shareholders. Changes include assigned and premium seating, airline partnerships, red-eye flights, and cutting capacity in unprofitable areas.
Speaking at the Skift Aviation Forum in Dallas in November, CEO Bob Jordan explained some of the business rationale behind the move. “A lot of customers love red-eyes, but what it does for you on the efficiency side is it just makes the aircraft utilization even higher, makes our people more efficient,” he said.
Jordan confirmed that changes have been underway at Southwest for a while, but activist investor Elliott sped up the process. “Southwest Airlines will return to industry-leading profitability,” he insisted.
JetBlue Boosts Guidance
Southwest is the latest big U.S. airline to raise its financial outlook. On Wednesday, JetBlue lifted its revenue guidance after bookings in November and December were tracking higher than expected following the U.S. presidential election.
JetBlue said improved demand and strong operational performance during Thanksgiving led to better revenue performance for the November holiday peak. For December, bookings are also exceeding prior projections for both peak and off-peak periods.
Watch Southwest CEO, Bob Jordan, at the Skift Aviation Forum 2024:
Photo Credit: Southwest CEO Bob Jordan speaks at the 2024 Skift Aviation Forum. Skift
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