Southwest Airlines Co. has promised Wall Street to return its route network to prepandemic levels by the end of next year, and said that leisure and business-travel booking trends bode well for 2023.
Southwest LUV, -4.03% is hosting an investor day in New York on Wednesday, and shared a presentation earlier in the day. The airline kept its 2023 and fourth-quarter 2022 outlook largely unchanged, except for lower estimates for fuel prices. It also reinstated the dividend, as expected.
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“Strong leisure and business revenue trends continue in fourth quarter 2022, and we continue to expect strong profits and margins,” the company said in the presentation.
“Based on current bookings, strong leisure revenue trends are estimated to continue in first quarter 2023, and we also expect continued managed business revenue improvement,” the company said.
Southwest is about 90% back at prepandemic routes.
The air carrier’s presentation “looks positive,” Citi analyst Stephen Trent said in a note.
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“The one place where the guide looked a little heavy” was the 2023 capital expenditure plan of between $ 4 billion and $ 4.5 billion, which compares with Citi’s estimate of $ 2.5 billion, he said.
Southwest’s 5-year outlook also remained mostly in line with prior targets, albeit also with that slightly elevated capex, Raymond James analyst Savanthi Syth said in a note.
Shares of Southwest have lost about 12% this year, compared with losses of around 17% for the S&P 500 index SPX, -0.31% in the same period.