Southwest Airlines aircraft are serviced at their gates at Fort Lauderdale-Hollywood International Airport on May 18, 2024, in Fort Lauderdale, Florida.
Gary Hershorn | Corbis News | Getty Images
Southwest Airlines Third-quarter unit revenue was forecast to fall Thursday as an oversupplied U.S. market forced airlines to discount tickets during what is typically the most lucrative period of the year.
Southwest said unit revenue for the current quarter could fall as much as 2% from last year and non-fuel costs could rise as much as 13%, with higher costs weighing on the airline through the end of 2024.
Here's how Southwest performed in the second quarter compared to Wall Street expectations, according to LSEG consensus estimates:
- Earnings per share: 58 cents adjusted compared to the 51 cents expected
- Revenue: $7.35 billion versus the $7.32 billion forecast
Southwest said its second-quarter revenue rose 4.5% from a year ago to $7.35 billion, a record, but its profit fell more than 46% to $367 million. Revenue per available seat mile, a gauge of airlines’ pricing power, fell 3.8%, roughly in line with Southwest’s reduced forecast last month.
“Our second quarter performance was impacted by external and internal factors and fell short of what we believe we are capable of delivering,” Chief Executive Bob Jordan said in an earnings release.
Adjusting for extraordinary items, Southwest reported earnings per share of 58 cents per share, above analysts' expectations.
The airline is in the midst of a restructuring as investor pressure mounts to boost revenue. Elliott Investment Management disclosed a nearly $2 billion stake in the airline last month and called for a leadership change.
On Thursday morning, Southwest announced it is scrapping its open-seating plan and offering some seats on its Boeing planes that have more legroom and adding overnight flights — the biggest changes to its business model in its more than five decades of flying. The changes, set to begin next year, would make Southwest more like its network airline rivals.
“We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement long-term transformation initiatives that are designed to drive significant top-line and bottom-line growth,” Jordan said.
Delta Air Lines and united airlines Executives said earlier this month that they expect U.S. capacity to begin to moderate next month, which could lead to higher rates.
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