Full year earnings of $945 million! Southwest Airlines fine-tunes Q3 financial forecast
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Civil Aviation Resource Network September 19, 2022 News: Last week, in the Form 8-K filing to the U.S. Securities and Exchange Commission (SEC) (a report that a domestic company needs to submit to the SEC when a major event occurs in the company), Southwest Airlines made a small revision to its financial forecast for the third quarter of 2022.
Southwest Airlines expects operating income in the third quarter of 2002 to increase by 9% to 11% compared with the same period in 2019, compared with a previous estimate of 8% to 12%; management income will decline by 26% to 28% compared with the same period in 2019 , the previous valuation was down 17% to 21%.
Southwest Airlines forecasts that capacity (as measured by ASM) in the third quarter will be flat compared to the same period in 2019, and that capacity for the full year 2022 will be about 4% lower than in 2019. Measured in cost per available seat mile (CASM-X) excluding jet fuel, its third-quarter cost will be 12% to 15% higher than in the third quarter of 2019.
Unlike many airlines, Southwest Airlines has a jet fuel hedging program as a buffer against soaring jet fuel prices. As of Sept. 8, the fair market value of Southwest's jet fuel derivatives contracts settled in the fourth quarter of 2022 was approximately $163 million, which would bring its full-year 2022 earnings to approximately $945 million.
Southwest Airlines currently has about $14.4 billion in cash and short-term investments, "which far exceeds our outstanding debt." Its adjusted debt-to-invested capital ratio is 48%, and it remains the only American airline to be rated investment grade by the three major rating agencies (Standard & Poor's, Moody's Investors Service, and Fitch Ratings). manage.
Southwest Airlines aggressively forecasts: "As long as there are no major unforeseen events, based on current trends, we believe Southwest Airlines will have stable and growing profits in the third and fourth quarters of 2022 and throughout 2022 (not including special items)."