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U.S. airline stocks get another boost: Southwest Airlines (LUV.US) and American Airlines (AAL.US) raise Q4 guidance

Market IntelThursday, Dec 5, 2024 9:20 am ET

1min read

Following Jetblue Airways (JBLU.US), Southwest Airlines (LUV.US) and American Airlines (AAL.US) also raised their fourth-quarter guidance, a positive sign for the US tourism industry as data showed record numbers of travelers over the Thanksgiving holiday.

Southwest Airlines raised its fourth-quarter revenue per available seat mile (RASM) due to strong travel trends and effective efficiency measures.

The airline said in a filing with the U.S. Securities and Exchange Commission on Thursday: "(Southwest Airlines) is encouraged by recent revenue trends and booking levels (including holiday travel in the fourth quarter) and currently expects the strong revenue trends and tactical initiatives to continue through 2025."

Southwest Airlines now expects fourth-quarter RASM to grow 5.5% to 7%, up from its previous forecast of 3.5% to 5.5%. That would equate to a year-over-year decline of about 4% in capacity.

Southwest Airlines also said on Monday that it performed "very well" over the Thanksgiving period (Nov. 25 to Dec. 1), with nearly 27,000 flights and 3.5 million passengers. The airline proudly announced that its on-time performance ranked among the best of U.S. domestic carriers, with the fewest delays of 45 minutes or more.

According to the Transportation Security Administration, another record was set over the Thanksgiving weekend, with more than 3 million people returning home on Sunday, up about 74,000 from the previous holiday record.

Meanwhile, American Airlines also raised its profit expectations for the final months of the year, expecting stronger performance during the key holiday travel season.

American Airlines said in a regulatory filing on Thursday that it expects fourth-quarter adjusted earnings per share to be between 55 cents and 75 cents, up from its previous forecast of up to 50 cents. The revised range easily beat analysts' average estimate of 40 cents.

Jetblue Airways also updated its fourth-quarter guidance on Wednesday due to strong year-end travel demand. The airline now expects revenue to decline 2% to 5%, down from its previous forecast of 3% to 7%; and expects available seat miles to decline 4.5% to 6.5%, down from its previous forecast of 4% to 7%.

Airlines stocks rose in premarket trading on Thursday, with American Airlines up nearly 7%, Southwest Airlines up more than 3%, Jetblue Airways and Delta Air Lines (DAL.US) up nearly 3%, and United Airlines (UAL.US) up nearly 2%.

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