Southwest Airlines Co (NYSE:LUV), beleaguered with huge flight cancellations in Florida owing to a computer glitch, heaped more upon itself when it forecast a drop in a key profitability metric for the third quarter.
Third quarter Revenue Per Available Seat Mile (RASM) will decline between 3% and 4%, below Barron’s estimate of down 1.7% and compared to the consensus estimate of down 1.3%. This will be the first quarter in 2016 in which Southwest will report negative RASM.
The budget airline which also reported a lower-than-expected second quarterly profit, recorded net income jumping 35% to $820mln, or $1.28 per share, in the quarter ended June 30.
Excluding items, Southwest earned $1.19 per share, missing the average analyst estimate of $1.21, according to Thomson Reuters I/B/E/S.
Southwest said it expected to buy back $250mln in shares as part of an accelerated repurchase programme.
Subsequent to the launch of the Q3 2016 ASR programme, the company will have $1.25bn remaining under its existing $2.0bn share repurchase programme.
During the day Southwest Airlines cancelled 220 more flights at Orlando International Airport, a day after the airline cancelled up to 700 flights because of a computer system outage.
Southwest Airlines shares dived 11.2% to $37.37 on Thursday.