Southwest Airlines shares slide as costs rise, unit revenues slip

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 three months ended June 30.

The airline’s second-quarter unit revenue dropped 8.3% from a year earlier, Southwest said. 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.