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Southwest Airlines lowers forecast range for Q4 fuel costs

Southwest Airlines Co. affirmed its unit revenue outlook for the fourth quarter but lowered its guidance range for fuel costs.

The U.S. carrier now expects fuel costs of $2.25 per gallon to $2.30 per gallon in the fourth quarter, down from its previous forecast range of $2.30 per gallon to $2.35 per gallon.

The company's new fuel cost guidance includes 7 cents per gallon in favorable cash settlements from fuel derivative contracts, compared to a prior estimate of 14 cents per gallon.

For the fourth quarter, Southwest Airlines still projected a flat to 1% year-over-year increase in operating costs per available seat mile, excluding fuel and oil expense and profit-sharing expense.

Southwest Airlines also maintained its forecast that operating revenue per available seat mile, a key airline industry metric, will grow between 1% and 2% year over year in the fourth quarter.

Available seat mile growth was also projected at between 6% to 6.5% year over year in the fourth quarter, unchanged from the prior guidance.