Airlines' outlook for summer is even sunnier than before

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JetBlue upped Q2 guidance for capacity and revenue.
JetBlue upped Q2 guidance for capacity and revenue. Photo Credit: JetBlue

High ticket prices and inflation in the economy haven't dimmed demand for summer leisure flying, according to reports and comments made by airlines on Thursday. 

In a regulatory filing, Southwest increased its second-quarter revenue guidance, citing strong load factors and an acceleration in bookings for summer travel. 

Southwest now expects Q2 operating revenue to exceed 2019 by 12% to 15%, up from last month's forecast of an 8% to 12% improvement. The airline expects that improvement even while flying 7% less capacity than in 2019 due to staffing challenges. 

JetBlue also submitted a regulatory filing with good news for shareholders. The carrier said it has reduced cancellations from the first three weeks of April, when it failed to operate an unusually high 10% of scheduled flights. 

In May, JetBlue has canceled less than 2% of flights, which has led the airline to upgrade its Q2 capacity guidance. JetBlue now expects 2% to 3% more capacity during the second quarter than 2019, compared to earlier guidance of flat to 3% growth.

JetBlue also has increased its revenue guidance, buoyed by more flying combined with the strong demand environment. The airline had previously expected revenue for the second quarter to top 2019 by 11% to 16%. On Thursday, JetBlue upgraded that forecast, saying revenue would come in "at or above the previous high end of guidance."

JetBlue and Southwest both issued new guidance ahead of presentations at the Wolfe Research Industrials Conference on Thursday. American, Frontier and Spirit also presented at the conference, offering bullish assessments of the ongoing demand environment without formally changing their revenue forecasts. 

"Demand for the airline product has indeed never been higher and it continues to grow out there," said American Airlines chief commercial officer Vasu Raja. 

"It's probably the best environment I've seen in three decades," added Frontier CEO Barry Biffle.

Airline stocks moved higher Thursday, and the US Jets Global ETF fund closed up 5.14%. 

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