The news delighted airline investors, who had been worried about growing capacity outstripping demand. From Bloomberg:
Capacity will expand less than 4 percent next year, down from this year’s pace of 5 percent to 6 percent, Dallas-based Southwest said in a U.S. regulatory filing Wednesday. About two percentage points of next year’s increase will come in the domestic market, with one to two percentage points in international service, the biggest discount carrier said.
Carriers have been discounting fares for more than a year as capacity growth has run ahead of demand, putting U.S. airline stocks on track for their biggest drop since 2011. A Bloomberg index of U.S. airlines advanced 5.1 percent at 10:25 a.m. in New York, the biggest intraday increase since July 12.
Those discounts have put a cap on airline earnings, which have still beaten expectations for the most part due to much lower fuel costs.
JETS shares rose $0.82 (+3.58%) to $23.75 in afternoon trading today. The only airline-focused ETF has fallen 4.7% year-to-date, but has now bounced about 20% off its yearly lows set in late July.