Southwest Airlines aircraft undergo maintenance at their gates at Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Florida on May 18, 2024.
Gary Hershorn | Corbis News |
Southwest Airlines on Thursday forecast a possible decline in third-quarter unit revenue as an oversupplied U.S. market forces airlines to supply discounts on their tickets during what is generally probably the most lucrative time of the 12 months.
Southwest said unit revenue for the present quarter could decline as much as 2% from a 12 months ago and costs (excluding fuel) could rise as much as 13%, with higher expenses weighing on the airline through the top of 2024.
Southwest shares fell greater than 6% in premarket trading Thursday.
This is how Southwest performed within the second quarter in comparison with Wall Street expectations, in accordance with LSEG consensus estimates:
- Earnings per share: 58 cents adjusted in comparison with expected 51 cents
- Revenue: $7.35 billion in comparison with expected $7.32 billion
Southwest said its second-quarter revenue rose 4.5 percent from a 12 months earlier to $7.35 billion – a record. But profit fell greater than 46 percent to $367 million, or 58 cents a share. Revenue per available seat mile, a measure of the airline’s pricing power, fell 3.8 percent, roughly consistent with the airline’s lowered forecast last month.
Southwest reported adjusted earnings per share of 58 cents, beating analysts’ expectations.
“Our second quarter performance was impacted by both external and internal factors and fell short of what we believe we can achieve,” CEO Bob Jordan said in an earnings release.
Southwest said Thursday that it was in talks about compensation for Boeing Because its sole aircraft supplier is struggling to deliver planes on time on account of safety and production crises, Southwest still expects only 20 deliveries from Boeing this 12 months – lower than half the number it previously forecast.
The airline is within the midst of a revamp amid mounting pressure from investors to do more to spice up revenue. Elliott Investment Management disclosed last month that it holds an almost $2 billion stake within the airline and called for a change in leadership.
Earlier Thursday, Southwest announced it could abandon open seating, offer more legroom seats on some Boeing aircraft and start flying overnight, the most important changes to its business model in greater than five many years of existence. The changes, which can take effect next 12 months, would bring Southwest closer to its network competitors.
“We are taking urgent and targeted steps to mitigate near-term revenue challenges and implement longer-term transformation initiatives designed to drive meaningful revenue and earnings growth,” Jordan said within the press release.
Delta Airlines And United Airlines Executives said earlier this month they expected capability within the U.S. to slow in August, which may lead to higher airfares.
