By Rajesh Kumar Singh and Kannaki Deka
(Reuters) -Southwest Airlines Co on Thursday forecast "strong" earnings in the current quarter after third-quarter profit topped Wall Street estimates, with demand for travel showing no signs of easing despite mounting economic worries.
The Dallas-based carrier expects operating revenue to jump 13%-17% in the quarter through December versus the same period of 2019 even as it forecasts around a 2% drop in capacity.
U.S. carriers are enjoying the strongest consumer demand in three years. However, shortages of aircraft and pilots are not letting the industry ramp up capacity to fully capitalize on the travel boom.
"Leisure and business demand remains strong," Chief Executive Officer Bob Jordan said in a statement.
Southwest's shares were up 3.8% in pre-market trading.
The airline expects aircraft delivery delays to persist into 2024. It is contractually scheduled to receive deliveries of 114 737 MAX jets from Boeing this year, but a number are expected to be delayed as the U.S. planemaker continues to face supply chain challenges and regulatory hurdles in the certification of the 737 Max 7.
Southwest, Boeing's biggest 737 customer, said it expects no 737 Max 7 deliveries this year and has converted 17 orders for next year to the 737 Max 8.
Boeing faces a late December deadline for the Federal Aviation Administration (FAA) to certify the MAX 7 under existing rules.
Southwest expects to fully restore its network to pre-pandemic levels by December 2023. Fleet utilization is expected to be limited by pilot staffing constraints for the majority of next year, fueling cost pressures.
The airline estimates non-fuel operating costs in the first half of 2023 will be in the range of flat to up 2% compared with first half 2022.
Third-quarter adjusted net income was 50 cents per share versus analysts' expectations of 42 cents per share.
(Reporting by Rajesh Kumar Singh in Chicago and Kannaki Deka in Bengaluru; Editing by Shailesh Kuber, Kirsten Donovan)
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