By Rajesh Kumar Singh
CHICAGO (Reuters) -Southwest Airlines reported an unexpected third-quarter profit on Wednesday, helped by a pickup in travel demand and cost controls.
The Texas-based carrier said travel bookings turned higher in early July and are expected to remain strong through December. As a result, the company expects to deliver record revenue in the fourth quarter, with a “meaningful” expansion in its margin.
Southwest’s shares rose more than 3% in after-hours trading.
Southwest, the biggest U.S. domestic carrier, has struggled to find its footing after the COVID-19 pandemic and is undergoing a major strategic transformation.
The airline has begun charging for checked bags, rolled out a new basic-economy fare, and will switch to a new assigned seat policy in January, replacing its previous open seating model.
It estimated revenue per available seat mile, or revenue per seat, in the fourth quarter to rise 1% to 3% from a year ago. Its non-fuel operating costs are expected to increase 1.5% to 2.5% over the same period.
It reported an adjusted profit of 11 cents a share, compared with analysts’ average expectations of a loss of 3 cents, according to data compiled by LSEG. Operating revenue totaled about $6.95 billion, compared with $6.29 billion expected by analysts.
Its non-fuel operating costs rose 3.4% from the year-ago period, compared with its forecast increase of up to 5.5%. The airline attributed this to cost discipline across the organization, reiterating its plan to slash $370 million in expenses this year.
(Reporting by Rajesh Kumar Singh; Editing by Richard Chang)
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