Shares of Southwest Airlines Co. LUV edged up 0.4% toward a 4-week high in premarket trading Thursday, after the air carrier updated its second-quarter estimates in the wake of “strong” travel demand during the Memorial Day weekend. The company’s estimate for the year-over-year change in revenue per available seat miles (ASM) improved to a decline of 8% to 10% from a decline of 8% to 11%. The outlook for capacity was unchanged at up approximately 14%, while the outlook for economic fuel costs per gallon was revised higher to approximately $2.55 from $2.45 to $2.55. “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,” Southwest said in a statement. The company said it still expects “solid profits” in the second quarter and for the full year, excluding nonrecurring items. The FactSet EPS consensus for the second quarter is $1.05, down from $1.30 a year ago, and for 2023 is $2.64, more than double 2022’s $1.16. The stock has shed 11.2% over the past three months through Wednesday, while the U.S. Global Jets exchange-traded fund JETS has lost 7.7% and the S&P 500 SPX has gained 5.8%.
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