Southwest shares gain the most since December 2021 on Thursday, air carrier provides upbeat operating revenue guidance

Southwest Airlines Co (LUV) on Thursday provided upbeat revenue forecast for the current quarter due to robust travel demand, despite concerns that a surge in inflation may curb consumer spending.

The company said it now expected a 12% to 15% increase in current-quarter operating revenue compared to pre-pandemic levels. Previously, it had forecast an 8% to 12% surge in operating revenue.

“The improvement in the Company’s second quarter 2022 operating revenue guidance is primarily attributable to continued passenger yield strength, which has more than offset the increase in its second quarter 2022 fuel price projection. Barring any unforeseen events and based on current trends, the Company expects solid profits and operating margins, excluding special items, in second quarter 2022 and for the remainder of this year,” Southwest said in a SEC filing.

Still, the airline said it expected available seat miles for the current quarter to be about 7% lower compared to pre-pandemic levels.

The shares of Southwest Airlines closed higher for a second consecutive trading session in New York on Thursday. It has also been the sharpest single-session gain since December 2nd 2021. The stock went up 6.01% ($2.55) to $45.00, after touching an intraday high at $45.44. The latter has been a price level not seen since May 11th ($45.52).

The shares of Southwest Airlines Company have risen 5.04% so far in 2022 compared with a 14.86% loss for the benchmark index, S&P 500 (SPX).

In 2021, Southwest Airlines Co’s stock went down 8.09%, thus, it underperformed the S&P 500, which registered a 26.89% gain.

Analyst stock price forecast and recommendation

According to TipRanks, at least 9 out of 15 surveyed investment analysts had rated Southwest Airlines Co’s stock as “Buy”, while 5 – as “Hold”. The median price target on the stock stands at $54.20.