Text size Southwest Airlines on Tuesday released optimistic forecasts as airline shares strengthened as signs of coronavirus cases continued to decline. While Southwest (ticker: LUV) doesn’t see an increase in bookings, demand appears to improve from January, one of the worst months in the pandemic. The airline said operating revenue in February is now expected to decline 65% to 70%, year over year, from an earlier range of 65% to 75%. A larger increase could take place in March, with expected revenues down only 20% to 30% year over year. And an even bigger increase is likely in April: forecasted capacity in the southwest that month up to 81% from last April, though still down 25% from April 2019. February is seasonally low and bookings tend to increase in March for spring break. But Southwest’s update is still a sign that consumers are eager to get on the plane and will book trips as the pandemic recedes. Southwest shares were ahead 0.4% on Tuesday to around $ 51. The larger NYSE Arca Airline index fared even better, gaining 1.9%. The improving outlook for Southwest follows encouraging demand for travel around the President’s Day holiday weekend, according to Raymond analyst James Savanthi Syth. Fare pricing could also strengthen, she notes, as carriers increase spring break prices. “We believe this is providing positive revenue for other US airlines,” she wrote in a report Tuesday. Indeed, this could bode well for airlines that haven’t released many improvements in their outlook for the first quarter, including Alaska Air Group (ALK), American Airlines Group (AAL), United Airlines Holdings (UAL ) and JetBlue Airways (JBLU). . The sector is also benefiting from the positive news from Washington. The Centers for Disease Control and Prevention said over the weekend it was not set to impose Covid testing requirements for domestic travel (similar to testing now required by the CDC for international arrivals. ). More rescue funding can also be given to the industry. The airlines are set to receive an additional $ 14 billion as part of the $ 1.9 trillion stimulus package the Biden administration is developing. However, Southwest stock may not be the best performer as the recovery strengthens. On the one hand, it’s trading at nearly 19 times the estimated profits for 2022, a steep premium for full-service network operators like United and Delta Air Lines (DAL). United is trading at 14.8 times 2022 earnings while Delta is trading at 11.5 times. Investors have long given Southwest a premium for its financial strength and potential to gain market share in a recovery led by domestic leisure travel. But this premium multiple could limit the stock’s gains relative to traders whose expectations are lower in their stocks. Indeed, Southwest has been lagging behind for months; it is ahead of just 13% in the past three months, less than half of the 27.3% gain in the NYSE Arca Airline index. The weakest title in the industry was United, up just 9.3% in the past three months. United is much more exposed to trade and international routes, and its stock reflects a slow recovery in those segments. Delta has also lagged behind, gaining 16.7% in the past three months. Investors increased the shares of domestic leisure-oriented carriers much more. Expectations are low for full-service carriers, although this could be a ticket to outperform if pandemic trends continue to improve. .