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Three major U.S.-based airlines this week released updated third-quarter projections, citing rising fuel prices as a catalyst. Crude oil prices have increased from $67.70 per barrel on June 27 to $90.60 as of Wednesday afternoon following announced extended production cuts in Saudi Arabia and Russia. Alaska Airlines, Southwest Airlines and United Airlines each increased projected Q3 fuel costs.
The increased fuel costs haven’t yet translated to widespread airfare hikes. According to the latest TD Cowen fare tracker—which monitors four domestic fare products for American Airlines, Delta Air Lines and United Airlines—the total average airfare for the week ending Aug. 28 fell to $290 from $319 the week prior. The minimum business fare was $413 versus $509 the week prior.
Alaska Airlines
Alaska Airlines now projects third-quarter fuel costs of $3.15 to $3.25 per gallon, up from prior guidance of $2.70 to $2.80, according to a Tuesday U.S. Securities and Exchange Commission filing. The carrier also updated its third-quarter capacity guidance to about a 13 percent year over year increase, compared with prior guidance of a 10 percent to 13 percent increase. Total Q3 revenue is projected to be up 1 percent to 2 percent versus up zero to 3 percent.
Southwest Airlines
Southwest Airlines continues to expect record third-quarter operating revenues based on continued “healthy” leisure demand and yields, and managed business trends continuing to perform “in line with expectations,” according to a Wednesday SEC filing. The carrier expects overall corporate travel to have a modest underlying year-over-year sequential trend improvement in the third quarter versus the second quarter.
Southwest updated its Q3 fuel cost projections to $2.70 to $2.80 per gallon versus $2.55 to $2.65 from prior guidance. It also revised its revenue per seat mile to be down 5 percent to 7 percent year over year, compared with a prior projection of a 3 percent to 7 percent decrease.
United Airlines
United Airlines noted in a Wednesday SEC filing that since mid-July, jet fuel prices have climbed more than 20 percent. As a result, the carrier now estimates Q3 fuel costs of $2.95 to $3.05 per gallon versus prior guidance of $2.50 to $2.80 per gallon.
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