When Southwest Airlines (LUV 53.78, +0.40, +0.8%) reported its February traffic update in early March, the airline said it expected first quarter revenue per available seat mile to decline in the 2% to 3% range versus a prior expectation that it would be be flat to down 1%. Today, Southwest Airlines provided its March traffic update and it is standing by that revised guidance.
Ideally, it would have been nice to hear Southwest revise its guidance upward, yet a reaffirmation is certainly better than another downward revision. Investors seem to appreciate that point, as well as the airline's added acknowledgment that bookings and unit revenue trends for the second quarter remain strong.
The basis for the lowered guidance in March was a better-than-expected trip completion rate and the loss of traffic in February from the heavy rainfall in California. It was said at the time that trends beyond the first quarter remain encouraging, so it was reassuring to hear Southwest reiterate that viewpoint today.
In terms of its March traffic, Southwest flew 11.3 billion revenue passenger miles, up 3.9% from the same period a year ago. Its available seat miles, meanwhile, increased 4.5% to 13.4 billion. The load factor for March 2017 was 84.1% versus 84.6% in March 2016.
Separately, Southwest announced after the close on Thursday that the company and the International Brotherhood of Teamsters, the union that represents Southwest's Material Specialists, finalized the language from the agreement in principle reached in early March, and that the agreement will be submitted to members for a vote.
Thus far, there has been a positive response to the March traffic update and outlook. The modest gains today are building on a 22.3% gain LUV had logged over the 52-week period through Thursday's close.
Southwest will release its first quarter results before the market opens on Thursday, April 27.