Southwest says it's cautious about summer travel

Southwest executive says airline is cautious about summer travel demand due to spending, taxes

Associated Press

DALLAS (AP) -- Southwest Airlines Co. says June ticket sales are "good" but the company remains cautious about demand during the peak summer travel season because of automatic government spending cuts and higher taxes.

The company expects revenue per seat for each mile flown will decline by a low-single-digit percentage in the second quarter. That's a closely watched statistic in the airline business.

Chief financial officer Tammy Romo said Thursday that the company has been able to boost traffic — the airline has been running a sale this week on fall travel — but the promotions have cut into revenue per passenger.

Revenue trends weakened in April and May at Southwest and several other airlines. Some industry officials blamed automatic government spending cuts, or "sequestration," which began this spring. Others pointed to the expiration of a temporary cut in the Social Security payroll tax rate, which in effect raised taxes on many workers.

Romo said that for June, "our bookings are good. However with the environment that we're operating in, we remain cautious about summer demand and any potential ongoing impact from sequestration and just the impact of higher taxes."

Romo spoke at a Deutsche Bank investor conference in New York.

Shares of Southwest rose a penny to $13.88 in morning trading.

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