Southwest (LUV), United (UAL), and Alaska Air (ALK) all raised jet fuel cost guidance, warning of higher prices to come. Yahoo Finance Live's Brad Smith and Julie Hyman break down the report and the outlook for airlines.
BRAD SMITH: Watching airline stocks today after Southwest United and Alaska all raised fuel cost guidance. Now, this is interesting here. They're Warning of higher prices to come despite renewed demand for travel. And actually, if you look at all of their individual statements, they, kind of, say the same thing but something slightly different here.
For United Airlines, at least, jet fuel prices climbing over 20%. As a result, companies all in fuel price now expected to be between $2.95 as you're seeing there on the screen to the top side of that range of $3.05 a gallon. But then if you go even further and, kind of, look at some of the other statements that have come out, I think for many of them-- and I took a look at Southwest this morning as well-- there's a different type of demand or at least customer category that you're going after.
If you're a United versus Southwest and for even Alaska, all of them coming out with this sweeping move to announce today. It just goes to show that investors need to continue to keep a close eye on where those fuel costs, which are negotiated usually months in advance, where that's moving for them. So them getting-- all of these airlines getting out in front of that for their investors.
JULIE HYMAN: Yeah and here's another one where the stocks are moving more in premarket trading, were more universally down. In particular, Southwest was taking a hit perhaps because Southwest is seen as more vulnerable than those other airlines to begin with. Southwest also coming out and saying unit revenue, which is a measure of demand and fares, is going to be down 5% to 7% from a year earlier this quarter.
The outlook had been 3% to 7%. So now 5% to 7%, so basically, that outlook getting a little bit worse. But again, it was hitting the shares more earlier and now they're a little changed. Perhaps investors taking a closer look, deeper dive into the filing as the morning goes on.
BRAD SMITH: Yeah, even with Southwest, they have given us a little bit of the inclination into how, of course, the hurricane season is beginning to impact them as well. That was named within this filing. So that perhaps an early glimpse of where Southwest might have a little bit more to say when they finally do report the full financial report or performance for the quarter.