Southwest Airlines trims second-quarter cash burn forecast
Reuters
Published May 19, 2021 06:44AM ET
Updated May 19, 2021 07:22AM ET
(Reuters) -Southwest Airlines Co on Wednesday trimmed its average core cash burn forecast by $1 million per day for the second quarter, as improving demand for leisure travel is expected to more than offset higher fuel prices.
U.S. airlines are preparing for a rebound in summer bookings after nearly a year in the doldrums as mass vaccination gains pace and countries ease travel restrictions for vaccinated travelers.
Southwest said it had seen improvements in leisure passenger travel demand and bookings for May and June this year, adding that based on current bookings, leisure fare levels in June are nearing June 2019 levels.
The company also said it was continuing to see "modest, consistent improvements" in business passenger demand and bookings, though it still lagged leisure travel trends.
The company now estimates its average core cash burn, excluding changes in working capital, to be in the range of $1 million to $3 million per day in the quarter, compared with its previous estimation in the range of $2 million to $4 million per day.
Cash burn, a measure that U.S. airlines began providing in 2020 to measure liquidity in light of the pandemic hit, was about $6 million per day in April. The company said operating revenues for the month performed in line with its expectations.
Southwest added it now expects capacity to increase about 87% in the second quarter from the year-ago quarter, compared with its previous forecast of a rise of about 90%, primarily due to changes in its service plans. (https://
The Dallas, Texas-based carrier also raised its estimates for fuel costs in the second quarter to be between $1.90 and $2.00 per gallon, from its previous forecast in the range of $1.85 to $1.95 per gallon.
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Written By: Reuters
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