Southwest Airlines (NYSE:LUV) fell nearly 5% in premarket deals after the ‘low-cost’ airline reported revenue and passenger ‘load’ beneath Wall Street forecasts for its third quarter.
At $6.53 billion, quarterly revenue was up 4.9% year-on-year but short of the $6.57 billion penciled in by analysts.
The airline reported a decline in net income on last year, at $193 million from US$277 million. It equated to 31 cents per share, from 44 cents.
‘Load factor’, which describes how full the airline’s planes are, was reported at 80.7% down from 85.4% in the same period last year, while Wall Street had predicted 83%.
Traffic by passenger miles, another metric airlines use to derive and measure revenue performance, was reported at 35.62 billion which showed a 6% improvement on 2022 comparative.
Looking ahead, Southwest aims to expand its flying by 10-12% in Q1 2024 – albeit thank represents a downgrade from the previous guidance of 16% growth.
"Overall, we are pleased with our accomplishments in third quarter 2023,” chief executive Bob Jordan said in a statement.
“We generated another quarter of profitability and record third quarter operating revenues.
“Revenue strength was driven by solid leisure demand throughout the quarter and by managed business continuing to perform largely as expected—as we continue to gain initiative-driven market share in the corporate travel space.”
Jordan added: “As we move into 2024, we are slowing our ASM growth rate to absorb current capacity, mature development markets, and optimize schedules to current travel patterns.
“We are in the midst of planning for 2024 and are focused on operational excellence and driving out inefficiencies, increasing productivity, improving reliability, and returning our margins back to historical levels.”
Jordan also noted the airline had secured “a cost effective” order book with Boeing, to modernize Southwest’s fleet.
In New York, Southwest stock was down 4.66% to $22.50 – now trading below the airline’s pandemic lows.