Southwest Airlines (NYSE:LUV) announced today that its third-quarter average price per fuel gallon costs will be higher than initially anticipated back in July.
The new estimates project economic fuel costs per gallon to range from $2.70 to $2.80, compared to the earlier forecast of $2.55 to $2.65.
As a result, LUV shares fell nearly 6% in early Wednesday trade.
In terms of booking trends, the airline noted that August 2023 close-in leisure bookings were at the lower end, with some modest impact due to seasonal trends.
Still, overall leisure demand and yields remain healthy. Southwest Airlines still expects a modest year-over-year sequential improvement in corporate travel during the third quarter.
The company has faced challenges related to extreme weather disruptions, including approximately 1,400 cancellations resulting from events such as hurricanes Hilary and Idalia, the Maui wildfires, and summer storm activity.
Despite these disruptions, Southwest Airlines has not made significant changes to its 2023 capacity plans compared to its previous guidance. Furthermore, it does not anticipate that the weather-related disruptions will have a substantial impact on its third-quarter results.