Key facts
- Southwest Airlines reported record revenue and net income for the second quarter.
- The company holds $1 billion in fuel hedges for the second half of 2022.
- Fuel hedging provided significant protection against rising jet fuel prices.
- Southwest expects to remain profitable in the third and fourth quarters.
- The airline completed over 99% of its flights in May and June.
Southwest Airlines reported record revenue and net income for the second quarter, attributing some of its success to its fuel hedging program. The airline announced it holds second-half 2022 fuel hedges valued at $1 billion, which have provided significant protection against rising jet fuel prices. CEO Bob Jordan stated that while inflationary pressures and suboptimal productivity are expected to continue, the company anticipates profitability in the third and fourth quarters. Southwest's fuel derivative contracts are based on West Texas Intermediate, Brent crude oil, and refined products. The carrier also noted operational improvements, completing over 99% of flights in May and June, and announced that its flight credits will no longer expire. Analyst Helane Becker commented that Southwest's revenue guidance was below consensus, while cost guidance was above.