Airlines warn of rising fuel costs, Southwest slashes revenue outlook

Major U.S. airlines have warned of rising jet fuel prices, which would drive up costs during the peak summer travel season.

Jet fuel in Chicago, Houston, Los Angeles and New York averaged $3.18 a gallon on Tuesday after the Labor Day holiday weekend, up more than 30% from July 5, the group said. industrial Airlines for America.

Fuel and labor are the largest costs for airlines. A spike raises questions about the share of Carriers were able to pass this increase on to their customers this summer after fares fell from last year.

The higher cost forecast comes as South West Airlines cut its unit revenue outlook for the current quarter. The Dallas-based carrier said it expects unit revenue to decline 5% to 7% year over year in the quarter ending Sept. 30. In July, Southwest said revenue could fall as little as 3% this quarter from a year ago.

“Although near-term leisure bookings in August 2023 are at the lower end of societal expectations, slightly impacted by seasonal trends, overall leisure demand and returns remain healthy,” the carrier said in a statement. securities record.

Southwest said it expects fuel to average between $2.70 and $2.80 a gallon this quarter, up from its earlier estimate of $2.55 to $2.65. It maintained its forecast of a 12% increase in capacity compared to 2022.

Other carriers have warned that rising costs could affect their bottom line.

Alaska Airlines said rising fuel prices would squeeze its pretax margin this quarter.

United airlines maintained its revenue forecast, but said it expects fuel prices of up to $3.05 for the quarter, up from its July estimate of no higher than $2.80 per gallon .

Airlines are expected to release their quarterly results in October.