Southwest Airlines predicts solid annual profit as travel rebounds By Reuters

(Reuters) -Southwest Airlines Co said on Thursday it expects to be “solidly profitable” for the year as travel rebounds following disruptions earlier this year due to the Omicron variant, sending the shares of the U.S. carrier up 3.8%.

The company, which turned a profit in the month of March, however, reported a bigger adjusted loss than expected in the first quarter due to flight cancellations and staff shortages.

The airline had in January canceled more than 5,600 flights and roughly 10% of its workforce contracted the coronavirus.

Southwest said it expects to be profitable in the second quarter. Major U.S. airlines have said their revenue in the current quarter would surpass pre-pandemic levels even as their capacity remains below that of 2019.

The surge in travel demand is helping carriers deal with soaring fuel costs, which have more than doubled in the past year.

U.S. airlines, which typically do not hedge against oil prices, have been hit by higher fuel costs due to the Ukraine war.

However, Southwest Airlines (NYSE:) said its multi-year fuel hedging program has helped it offset increases in jet fuel price in the first quarter of this year.

“Our operational performance improved during February and March following acute staffing challenges experienced in January due to the Omicron variant,” Chief Executive Officer Bob Jordan said.

The airline’s operating revenue rose to $4.7 billion from $2.05 billion a year earlier. The company expects annual operating revenue to increase between 8% and 12% compared with 2019.

It reported an adjusted loss of 32 cents per diluted share for the first quarter, compared with an analysts’ expectations of a loss of 30 cents per share, according to Refinitiv data.