Southwest Airlines Boeing 737-700 aircraft as seen landing at dusk time at Ronald Reagan Washington National Airport DCA in Arlington County, Virginia over the Potomac River in america of America flying over water and buildings.
Nicolas Economou | Nurphoto | Getty Images
Southwest Airlines shares slid greater than 6% in premarket trading Thursday after the airline reported lower unit revenue and better costs in the course of the second quarter — and said the trends are prone to proceed this quarter.
The Dallas-based airline’s second-quarter unit revenue dropped 8.3% from a 12 months earlier, Southwest said, citing a policy change last summer that removed expiration dates from pandemic travel credits.
The carrier said it expects unit revenue to fall as much as 7% in the course of the third quarter on capability up 12% from a 12 months earlier. It blamed “difficult comparisons from the pent-up travel demand surge in 2022, and better than seasonally-normal growth.”
Airlines have enjoyed record revenue in recent months, but airfare within the U.S. has dropped from 2022, based on the most recent inflation read.
Southwest said it’s “revamping” 2024 schedules to reflect changing customer demand as business-travel revenue recovers but lags pre-pandemic levels.
“We’re working to align our network, fleet plans, and staffing to higher reflect the present business environment,” CEO Bob Jordan said in an earnings release.
![Southwest Airlines CEO Bob Jordan: We predict record revenues again in Q3](https://image.cnbcfm.com/api/v1/image/107277771-16904615811690461578-30494224601-1080pnbcnews.jpg?v=1690462361&w=750&h=422&vtcrop=y)
Jordan told CNBC’s Phil LeBeau on Thursday that the revamp could mean larger drops in capability than usual on Mondays and Tuesdays, when business travel demand would normally pick up. The airline also plans to chop some short-haul flights in favor of longer-haul ones in addition to reduce very early and really late departures.
Here’s how Southwest performed within the second quarter, compared with Wall Street expectations based on Refinitiv consensus estimates:
- Adjusted earnings per share: $1.09 vs. an expected $1.10
- Total revenue: $7.04 billion vs. an expected $6.98 billion
The airline’s net income fell to $683 million, or $1.08 a share, down 10% from $760 million, or $1.20 per share, in the course of the second quarter of 2022.
Revenue got here in at a record $7.04 billion for the three months ended June 30, ahead of analyst expectations and up 4.6% from the identical quarter last 12 months.
Meanwhile, operating expenses rose greater than 12% from a 12 months earlier. Stripping out fuel, expenses were up 7.5%, at the upper end of the corporate’s previous cost guidance due partly to planned wage increases tied to open labor agreements.
Southwest executives will hold an analyst and media call at 12:30 ET, once they’re expected to face questions on growth plans and progress on improving technology to avoid a repeat of the vacation meltdown. Also they are prone to provide an update on what has been difficult labor talks with pilots.