Shares in Southwest Airlines Co (NYSE:LUV) fell in pre-market trade on Wednesday after the low-cost carrier cut its outlook for first-quarter revenue per available seat mile – a key industry metric.
RASM is used to compare the efficiency of airlines, and generally the higher the figure is, the more profitable the airline in question is.
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Southwest had previously guided for a rise of between 1-2% in the first quarter, but said on Wednesday that it now expects RASM to be in-line with last year.
The downgrade was primarily due to the competitive fare environment, which is continuing to pressure passenger revenue yields, while travel demand from the timing of the spring break holidays has been lower-than-anticipated.
Dallas-based Southwest added that the “sub-optimal” flight schedule due to the retirement of its Boeing 737-300 classic fleet also hit passenger revenue yields and load factors.
There was some better news in terms of costs though, with the company now expecting first-quarter cost per available seat mile to be flat to up 1% and fuel costs to be about US$2.10 per gallon.
Back in January, Southwest guided for unit costs, excluding fuel and oil expenses and special items, to rise 0.5% to 1.5% and for fuel costs of between US$2.10 and US$2.15 a gallon.
Southwest shares were down 4.1% to US$58.18 shortly before the opening bell in New York.