Southwest Airlines believes it can attain positive RASM and flat cost growth in 2018

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Southwest is joining the US majors Delta and American in forecasting positive unit revenue growth in 4Q2017, and the country’s largest domestic airline also believes it will achieve a positive performance in that metric in 2018 as it works to attain a flat unit cost performance for the year.

The company has not finalised its capacity plans for 2018 but is declaring its ASM growth will fall below 5.7%, and range from 3% to 4% in 1H2018. Southwest’s international expansion is likely to slow in 2018 as the airline focuses on preparing for new service to Hawaii. Details of Southwest’s plans for Hawaii remain scant, but the airline is hinting it could launch inter-island service at some point in the future, which would spur a significant market disruption in that region.

Southwest has not escaped pressure from discounting in the US market place, but the company is experiencing some improvement in 4Q2017 as yields appear to be trending in a more positive direction.

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