Southwest, United sound alarm over rising kerosene costs

Southwest Airlines on Wednesday pointed to weaker holiday bookings in August and along with two other US carriers warned of higher fuel costs in the third quarter due to a rise in crude oil prices.

The largest US domestic airline said August bookings were at the lower end of expectations, partly due to seasonal trends, but insisted leisure demand and earnings overall remain healthy.

Southwest shares fell 4% premarket before reversing some losses to end down 2.6% at $29.97.

The forecast comes at a time when domestic travel demand is showing signs of slowing, with inflationary pressures hurting consumers even as airlines are giving out costly contracts to retain workers.

United Airlines and Alaska Air Group also warned of higher fuel costs in the current quarter as crude oil prices rose for a third straight month in August and there were signs of a tightening in supply.

In a regulatory filing, United said jet fuel prices have risen more than 20% since mid-July.

Southwest Airlines jetliner
Southwest, the US’s largest domestic airline, said bookings for August were at the low end of its expectations.

United Airlines plane
According to United, jet fuel prices have risen by over 20% since mid-July.

The airline also said it has no immediate plans to move its headquarters from Chicago to Denver after purchasing 113 acres of land there. Chief Financial Officer Gerald Laderman told the TD Cowen Transportation Conference that the first task is to expand the flight training center in Denver.

Southwest said it still forecasts “solid earnings (in the third quarter)” but trimmed its expectations for revenue per available seat-mile — an indicator of pricing power — to a 5% to 7% decline, compared to a 3% to 7% decline Earlier Predicted % Decline.

Alaska Air expects a quarterly adjusted pretax margin of 10% to 12%, down from a prior expectation of 14% to 16%.

Southwest Airlines ticket office
Southwest said it continues to forecast solid third-quarter earnings.

US airlines generally do not hedge against fuel costs and are therefore vulnerable to price fluctuations.

“The relatively rapid increase in fuel prices has given the industry little time to react with tariffs,” Stephen Trent, an analyst at Citi Research, said in a note.


DUSTIN JONES is a USTimeToday U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. DUSTIN JONES joined USTimeToday in 2021 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with DUSTIN JONES by emailing

Related Articles

Back to top button