Southwest Airlines: Competitive fare environment continues to pressure revenue yields

Southwest Airlines stated (21-Mar-2018) Mar-2018 RASM trends for the non peak travel periods have been below previous expectations, primarily due to the competitive fare environment that continues to pressure passenger revenue yields and lower than expected travel demand due to the timing of spring break holidays. The carrier also noted its sub-optimal 1Q2018 flight schedule was driven by the retirement of its Boeing 737-300 classic fleet, which also impacted passenger revenue yields and load factors. For the remainder of Mar-2018, customer demand currently remains strong and year-on-year RASM trends are currently favourable for the peak Easter travel period. Southwest continues to plan for RASM growth in 2018. The carrier continues to be encouraged by cost trends and now expects its 1Q2018 operating expenses per available seat mile to be in the range of flat to up 1%. Southwest now expects 1Q2018 fuel costs to be approximately USD2.10 per gallon, including approximately USD0.07 per gallon in fuel hedging premium expense. Based on current trends and bookings, Southwest still expects to outperform the industry with its strong 1Q2018 margins. [more - original PR]