Airlines warn of rising fuel costs, Southwest reduces sales prospects

Major U.S. airlines warned of a spike in jet fuel prices that would drive up costs during the busy summer travel season.

According to the industry group Airlines for America, fuel for planes in Chicago, Houston, Los Angeles and New York cost an average of $3.18 per gallon on Tuesday after the Labor Day holiday weekend, up more than 30% from July 5th corresponds.

Fuel and labor are the biggest costs for airlines. An increase raises the question of how much of it Airlines were able to pass that increase on to their customers this summer after fares fell compared to last year.

This is where the higher cost forecasts come from Southwest Airlines has narrowed its sales forecast for the current quarter. The Dallas-based airline said it expects unit revenue to fall 5% to 7% year-over-year in the three months ended Sept. 30. In July, Southwest said revenue this quarter could fall just 3% from a year ago.

“While short-term leisure bookings in August 2023 were at the lower end of the company’s expectations and were slightly impacted by seasonal trends, overall leisure demand and returns remain healthy,” the airline said in a statement submission.

Southwest said it expects average fuel prices to range from $2.70 to $2.80 per gallon this quarter, up from its previous estimate of $2.55 to $2.65. The company stuck to its forecast that capacity would increase by 12% from 2022.

Other airlines warned that higher costs could hurt their results.

Alaska Airlines said higher fuel Prices will reduce its pre-tax margin this quarter.

United Airlines The company maintained its revenue forecast but said it expects fuel prices to be up to $3.05 a gallon for the quarter, compared with July’s estimate of no more than $2.80 a gallon.

The airlines are expected to report their quarterly results in October.