Pop in business travel to help fuel 2022 profit: Southwest

Bloomberg

Southwest Airlines Co expects a rebound in domestic travel to carry into the summer, joining rivals predicting that consumers will shrug off worries about coronavirus variants, fork over higher fares and fill planes in the coming months.
Southwest maintained a plan to restore 93% of its pre-pandemic flight capacity this quarter as robust leisure demand is joined by improving corporate travel, the Dallas-based airline said as it reported financial
results. Revenue will be as much as 12% higher than three years ago.
An uptick in business and international trips driven by the return to offices and lifting of travel restrictions is giving carriers new reason for optimism after a nascent recovery in domestic flying. That demand, coupled with a tightening of available seats, has enabled the industry to boost fares enough to cover jet fuel prices that are more than double the prior year in some regions.
“While it’s a long ways off and it’s hard to predict, we have a shot of ending 2022 with managed business demand fully recovered to 2019 levels,” CEO Bob Jordan said. “We don’t see anything on the horizon that worries me about demand falling off” more broadly.
The carrier expects to be “solidly profitable” for the remaining three quarters and the full year, he said. The outlook, which matched similarly upbeat projections from United Airlines and Delta Air, is based on strong spring and summer leisure bookings and improved corporate revenue each month this quarter.
Southwest is adding more short-haul trips to business markets this quarter because of that expected boost in demand, which Jordan said is continuing “into all the forward months that we can see.” Southwest, frustrated with ongoing delays in federal certification of the Boeing Co 737 Max 7 aircraft, this month converted orders for 40 of those planes to the Max 8 model.
Southwest continues to battle persistently high operating costs as manpower shortages — particularly for pilots and flight instructors — stymie the airline’s progress towards restoring pre-pandemic flying levels. It’s also facing a jump in labour spending across all work groups and increased airport expenses. The carrier added 3,300 workers in the first quarter, net of attrition, towards hiring 8,000 this year.