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 the United States of America flying over water and buildings.
Nicolas Economou | Nurphoto | Getty Images
Southwest Airlines shares slid more than 6% in premarket trading Thursday after the airline reported a drop in unit revenues and higher costs for the second quarter.
The airline’s second-quarter unit revenue dropped 8.3% from a year earlier, Southwest said, citing a policy change last summer that removed expiration dates from pandemic travel credits.
Meanwhile, operating expenses rose more than 12% in the three months ended June 30 from a year earlier. Stripping out fuel, expenses were up 7.5%, at the higher end of the company’s previous cost guidance due in part to planned wage increases tied to open labor agreements.
For the third quarter, Southwest said it expects unit revenue to fall as much as 7% on capacity up 12% from a year earlier.
The carrier blamed “challenging comparisons from the pent-up travel demand surge in 2022, and higher than seasonally-normal growth.”
Here’s how Southwest performed in the second quarter, compared with Wall Street expectations according to 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, during the second quarter of 2022.
Revenue, however came in at a record $7.04 billion, ahead of analyst expectations and up 4.6% from the same quarter last year.
Southwest executives will hold an analyst and media call at 12:30 ET, when they’re expected to face questions about growth plans and progress on improving technology to avoid a repeat of the holiday meltdown. They are also likely to provide an update on what has been difficult labor talks with pilots.
This is breaking news. Check back for updates.