A Southwest Airlines aircraft is parked at Ellison Onizuka Kona International Airport in Kehole awaiting passengers on January 20, 2024 in Kailua-Kona, Hawaii.
Kevin Carter | fake images
Southwest Airlines Shares fell on Wednesday after the airline lowered its second-quarter revenue forecast, citing changes in booking patterns.
The stock had fallen about 4% in early trading before recovering some losses.
Southwest expects revenue per available seat mile, the amount the airline generates for each seat flown a mile, to fall 4% to 4.5% in the second quarter from last year, after previously estimating a decrease of 1.5% to 3.5%.
It also said its unit expenses, excluding fuel, would increase by up to 7.5% from the same period a year earlier, after previously expecting no change.
It said its capacity would increase by up to 9% rather than the flat growth it had previously expected in the number of flights.
Southwest still expects record quarterly operating income in the second quarter.
Airlines are attracting record numbers of passengers, but higher costs and capacity growth have weighed on fares and profits.
“The reduction of the Company's RASM [revenue per available seat mile] “Expectations were primarily driven by complexities in adapting its revenue management to current booking patterns in this dynamic environment,” Southwest said in a statement.
Other carriers such as Delta and UnitedMeanwhile, they have enjoyed the return of passengers to international travel and have invested heavily in travelers' willingness to pay more for roomier seats.
Southwest is under pressure from activist investors at hedge fund Elliott Management, which has called for CEO Bob Jordan and President Gary Kelly to be replaced, saying the company is underperforming and needs a change at the top.
The Dallas-based airline has expressed confidence in its leadership and reiterated that it is considering revenue initiatives such as assigned seating or premium seating, which would involve massive changes to the company's simple business model that has been profitable for the most part. of the last five decades.
“We will adapt as our clients' needs adapt,” Jordan said at an industry event hosted by Politico earlier this month.
