Southwest Airlines Co. (LUV) said it is cutting the cash burn projections on expectations of improving operating revenue trends that more than offset higher fuel prices.

Cash burn is a measure that most U.S. airlines began providing in 2020 to measure liquidity considering the negative impact of the pandemic. Most airlines have been lacking enough revenue to cover expenses that they cannot avoid, leading them to using up its cash reserves.

The airline now estimates its average core cash burn to be in the range of $1 million to $3 million per day in second quarter, compared with its previous estimation in the range of $2 million to $4 million per day. In the month of April, the average core cash burn was approximately $6 million per day.

Southwest continues to experience improvements in leisure passenger demand, but business travel demand continues to significantly lag leisure trends. The weak demand in business travel is expected to have a negative impact on close-in demand and average passenger fares in second quarter 2021.

The airline continues to experience improvements in leisure passenger demand and bookings for May and June 2021 travel, with expectations of improving passenger traffic and fares from April.

For the second quarter, the company now expects its capacity to increase around 87 percent from last year, but decrease approximately 16 percent from 2019. The previous estimate was for the second quarter 2021 capacity to increase around 90 percent from last year and decrease around 15 percent from 2019.

In its update on financial and operational trends, Southwest reported that April operating revenue was down around 42 percent compared to 2019, and load factor was around 79 percent. Available seat miles or ASMs, or capacity was up 83 percent from last year, but down 24 percent from fiscal 2019.

However, April 2021 operating revenues were higher sequentially from March 2021, driven by improvements in leisure passenger traffic and fares.

Southwest is in the process of adjusting its published flight schedule for July 2021, and currently expects July capacity to increase approximately 41 percent from last year and decrease approximately 3 percent from 2019.

Passenger demand and booking trends remain primarily leisure-oriented and inconsistent by region, the company said. Despite this, the company remains cautious and continues to plan for multiple fleet and capacity scenarios.

In pre-market activity on the NYSE, Southwest shares were trading at $60.66, down 2.27 percent.

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