Southwest Airlines Forecasts Strong Fourth-Qtr Revenue on Resilient Travel Demand

Oct 27 (Reuters) - Southwest Airlines Co forecast a higher fourth-quarter revenue on Thursday after beating profit estimates, as it benefited from strong leisure travel demand that is showing no signs of easing in the face of economic worries.

Shares of the U.S. carrier were up 4.9% before the bell.

The company said it expects operating revenue to jump 13% to 17% in the current quarter versus 2019, though it expects to have about 2% lower capacity.

"We currently expect revenue trends to improve sequentially from third quarter to fourth quarter 2022, despite lower capacity," Chief Executive Officer Bob Jordan said in a statement.

Major U.S. carriers are enjoying the strongest consumer demand in three years, but the airline industry is facing higher fuel and wage bills amid worries that consumers may cut travel spending due to recession risks.

"The company continues to experience inflationary cost pressures in fourth quarter 2022, in particular with higher rates for labor, benefits, and airports," Jordan said.

The Dallas-based company said it expects strong demand trends to continue into 2023, but warned its fleet utilization is expected to be limited by industry-wide pilot shortages.

The company said in July it was on track to hire more than 1,000 pilots this year and plans to recruit about 2,200 in the next.

Southwest said it continues to work with Boeing to finalize 2023 aircraft delivery plans, adding that it expects the delivery delays to persist into 2024.

The airline said its route network will be about 90% restored by the summer of 2023, and fully restored by December next year, versus 2019 flight levels.

The carrier also expects its cost per available seat mile, excluding fuel, to increase between 14% to 18% in the fourth quarter, from the same period in 2019.

Southwest reported third-quarter adjusted net income of 50 cents per share versus analysts' expectations of 42 cents per share.

Revenue for the third quarter was a slight miss, with the carrier reporting operating revenue of $6.22 billion versus analysts' expectations of $6.21 billion.