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Jules Financial Enterprise

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Southwest stock gains, after seeing better-than-expected leisure passenger demand in February

Economy, Finance

Shares of Southwest Airlines Co. rose 1.1% in premarket trading Tuesday, after the air carrier disclosed its operations update for January and provided a February outlook that showed further improvement. The company said operating revenue for January was down 66% from a year ago, compared with its previous estimate of down 65% to 70%. Southwest kept is February estimate at a decline of 65% to 70% and introduced a March estimate of down 20% to 30%. Load factor was 53% in January, within its guidance range of 50% to 53%, but it raised its February guidance range to 60% to 65% from 50% to 55%. Southwest reiterated its estimate for capacity to decline 35%. Southwest said that while it continues to experience “significant year-over-year negative impacts” due to the COVID-19 pandemic, it has recently experienced “an improvement in leisure passenger demand and bookings” in February, compared with previous estimates. Business travel demand remains depressed, the company said. The average daily cash burn rate for January was $15 million, and Southwest lowered its first-quarter outlook to $15 million from $17 million. The stock has rallied 12.6% over the past three months through Friday, while the U.S. Global Jets ETF has advanced 12.7% and the S&P 500 has gained 8.5%.

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