Southwest Airlines Co. (NYSE: LUV) lifted the market’s sentiment after providing an update on its projections for the second quarter of 2022. Shares of this $21.1 billion airline company gained 1.4% during the pre-market trading session on Tuesday. The closing price on Friday (June 17) was $35.63.
As noted, the passenger airline now expects its load factor in the second quarter to be within the 85% to 87% range, which is higher than the previous expectation of roughly 85%. Healthy demand for air travel, especially in the summers this year, has been beneficial for the company.
The company also increased its expectation for fuel hedging cash settlement gains per gallon to $0.70 from the previously stated $0.65.
LUV also kept some of its projections for the second quarter of 2022 intact. It still predicts second-quarter 2022 operating revenues to grow in the 12% to 15% range, versus the comparable period in 2019.
Meanwhile, available seat miles are still expected to be down 7%, and the economic fuel costs per gallon are constant in the $3.30 to $3.40 range. Similarly, the projection for fuel hedging premium expense per gallon is reaffirmed at $0.05, while cost per available seat mile (CASM) is still predicted to grow by 14% to 18% versus the 2019 period.
Stock Rating
On TipRanks, Southwest Airlines has a Moderate Buy consensus rating based on nine Buys, five Holds, and one Sell. LUV’s average price target of $54.20 suggests 51.95% upside potential from current levels. Over the past year, shares of LUV have increased 1.9%.
A few days ago, Andrew Didora of Bank of America (BAC) Securities reaffirmed a Buy rating on LUV and a price target of $60 (68.21% upside potential).
Blogger Sentiment
According to the TipRanks tool, financial bloggers are 89% Bullish on LUV, compared to the sector average of 68%.
Conclusion
Airline companies in the United States and globally are enjoying a surge in demand for air travel, both domestically and internationally, after the pandemic-hit years of 2022 and 2021.
Southwest Airlines’ increase in load factor for the second quarter of 2022 is reflective of solid demand and customers’ preferences for its services.
