Southwest, the largest US domestic carrier, said August bookings were at the lower end of its expectations, in part due to seasonal trends, but maintained that overall leisure demand and yields rem…
United Airlines and Alaska Air Group also warned of higher fuel costs in the current quarter as crude oil prices rose for a third straight month in August, amid signs of tightening supply.Southwest, the largest US domestic carrier, said August bookings were at the lower end of its expectations.The carrier also said it had no imminent plans to move its headquarters to Denver from Chicago after buying 113 acres of land there.
Southwest said it continues to forecast a “solid profit,” but trimmed its expectations for revenue per available seat mile – a proxy for pricing power – to a 5% to 7% fall, compared with a 3% to 7% fall forecast earlier. Alaska Air expects a quarterly adjusted pre-tax margin of 10% to 12%, lower than its prior expectation of 14% to 16%.US airlines do not generally hedge against fuel costs, making them vulnerable to price swings.
“The relatively quick up move in fuel has given the industry little time to respond through fares,” Citi Research analyst Stephen Trent said in a note.
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