Southwest Air’s slight outlook boost disappoints Wall Street

BLOOMBERG

Southwest Airlines Co kept its year-end outlook largely intact despite stronger-than-expected holiday travel, unsettling investors who had been anticipating a bigger boost.
The carrier slightly raised the low end of its fourth-quarter revenue forecast while keeping projections for non-fuel costs and flight capacity unchanged. Fuel expenses will be as much as $3.10 a gallon in the period, Southwest said in a regulatory filing, up 10 cents from the prior range.
The modest adjustments fell short of the guidance boost offered by rival JetBlue Airways Corp, which raised its sales and profit expectations for the quarter and full year. Investors are looking for signs of a travel rebound over the crucial holiday period after domestic-focused carriers struggled in recent months with weakening demand for US routes. An oversupply of plane seats in the local market had been forcing some airlines to cut fares.
Southwest’s shares fell as much as 4.8% after trading began in New York.
The company kept its projections for non-fuel costs and flight capacity unchanged, and unit revenue will fall this quarter despite the late-year strides. “Leisure demand remains strong with record revenue over the Thanksgiving holiday period,” the carrier said, with travel and average fares continuing to be “healthy.” Managed business bookings have been better than it expected in November and so far in December.