Southwest Airlines (LUV) is preparing for a bustling holiday travel period.
In a conversation with Yahoo Finance at the JPMorgan Chase “Make Your Move Summit” in Frisco, Texas, Southwest’s CEO Bob Jordan expressed optimism about the upcoming season. “Demand is robust as we approach the holidays,” he remarked.
Jordan highlighted the particular strength in leisure travel, which is translating into impressive holiday booking numbers. “Our bookings are surpassing last year’s figures at this time,” he noted.
This surge in flight demand may instill renewed confidence among investors, who have been wary due to a recent dip in Southwest shares — the lowest in nine years — triggered by altered travel habits and escalating costs. This led the airline to moderate its growth expectations for 2024.
However, Jordan remains positive. “Travel patterns are normalizing without any signs of weakening. We’re seeing records in operating revenues, passenger numbers, and rapid rewards revenue,” he stated.
Southwest’s positive forecast mirrors that of American Airlines (AAL), which earlier reported steady demand and robust holiday bookings compared to last year.
But the longevity of this trend raises questions.
Despite economic uncertainties, airline executives remain upbeat, which might come as a surprise. Americans continue to feel the pinch of elevated prices. Persistently high inflation might prompt further rate hikes by the Fed, as JPMorgan Chase CEO Jamie Dimon indicated to Yahoo Finance’s Executive Editor Brian Sozzi in an exclusive interview at the Summit.
Another rate increase could strain consumers, although Dimon observed that, despite challenges, they are still in “very good shape.”
Economists echo this resilience. Mark Zandi, Chief Economist at Moody’s Analytics, mentioned to Yahoo Finance Live that the steadfast consumer is a “key reason for optimism.” As long as spending persists, the threat of a recession in the US seems distant.
These factors spell good news for travel stocks. While travel demand may not have fully rebounded to pre-pandemic levels, recent trends and airline executive statements indicate that travel activity is lively, positioning companies like Southwest to reap the benefits.
