Southwest Airlines Company is providing updated guidance regarding selected financial trends.
The following table presents updated selected financial guidance for second quarter 2023. These projections are based on current booking trends and the Company’s current outlook, and actual results could differ materially.
| 2Q 2023 Estimation | Previous estimation | |||
| RASM (a), year-over-year | Down 8% to 10% | Down 8% to 11% | ||
| ASMs (b), year-over-year | Up ~14% | No change | ||
| Economic fuel costs per gallon1 (c) | ~$2.55 | $2.45 to $2.55 | ||
| CASM-X (d), year-over-year2 | Up 5% to 8% | No change | ||
| Scheduled debt repayments (millions) | ~$10 | No change | ||
| Interest expense (millions) | ~$65 | No change |
| (a) Operating revenue per available seat mile (RASM, or unit revenues). | ||
| (b) Available seat miles (ASMs, or capacity). The Company’s flight schedule is currently published for sale through November 4, 2023. | ||
| (c) Based on the Company’s existing fuel derivative contracts and market prices as of May 25, 2023. Includes fuel taxes and fuel hedging premium expense of $0.06 per gallon and favorable cash settlements from fuel derivative contracts of $0.09 per gallon, compared with previous expectations of fuel hedging premium expense of $0.06 per gallon and favorable cash settlements from fuel derivative contracts of $0.13 per gallon. | ||
| (d) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing (CASM-X). | ||
Travel demand during the Memorial Day weekend was strong. Second quarter 2023 leisure travel demand and yields continue to be strong, including a recent improvement in close-in leisure demand and yields, while managed business revenue trends continue to perform as previously expected. The Company’s second quarter 2023 capacity and CASM-X are expected to be in line with previous guidance. The Company has not made any material revisions to its 2023 fleet or capacity plans compared with previous guidance, which reflected the expectation to receive approximately 70 Boeing 737-8 aircraft deliveries and for capacity to increase approximately 14 percent to 15 percent, year-over-year.
Barring significant unforeseen events and based on current trends, the Company continues to expect solid profits in second quarter and full year 20233, both excluding special items.
1Economic fuel cost projections do not reflect the potential impact of special items because the Company cannot reliably predict or estimate the hedge accounting impact associated with the volatility of the energy markets or the impact to its financial statements in future periods. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for projected results is not meaningful or available without unreasonable effort.
2Projections do not reflect the potential impact of fuel and oil expense, special items, and profitsharing because the Company cannot reliably predict or estimate those items or expenses or their impact to its financial statements in future periods, especially considering the significant volatility of the fuel and oil expense line item. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for projected results is not meaningful or available without unreasonable effort.
3Projections do not reflect the potential impact of special items because the Company cannot reliably predict or estimate those items or expenses or their impact to its financial statements in future periods. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for these projected results is not meaningful or available without unreasonable effort.
Meanwhile SWAPA representing the pilots is not happy.
