A Southwest Airlines plane is parked at Ellison Onizuka Kona International Airport in Keahole waiting for passengers on January 20, 2024 in Kailua-Kona, Hawaii.
Kevin Carter | Getty Images
Southwest Airlines Shares fell nearly 4% in premarket trading Wednesday after the carrier cut its second-quarter revenue forecast, citing changing booking patterns.
Southwest expects revenue per available seat, which is the amount the airline earns for each seat it flies a mile, to decline between 4% and 4.5% in the second quarter compared with last year, after a previous estimate of a 1.5% to 3.5% decline.
It also said unit expenses, excluding fuel, would rise by up to 7.5% compared to the same period last year, after previously expecting no change.
It said its capacity would rise by up to 9% instead of the flat growth it had previously expected in its flight volume.
Southwest still expects record quarterly operating revenue in the second quarter.
Airlines are welcoming record numbers of passengers, but rising costs and growth in capacity have weighed on prices and profits.
“The decline in the company's RASM (revenue per available seat) forecast was primarily driven by complexities in adapting its revenue management to current booking patterns in this dynamic environment,” Southwest said in a filing.
Other transportation companies such as Delta And unitedAt the same time, airlines have enjoyed the return of passengers to international travel and have invested heavily in travelers' willingness to pay more for more spacious seats.
Southwest is under pressure from activist investors from hedge fund Elliott Management, which has called for CEO Bob Jordan and Chairman Gary Kelly to be replaced, saying the company is underperforming and needs a change at the top.
The Dallas-based airline expressed confidence in its leadership and confirmed that it is considering revenue initiatives such as seat allocation or premium seating, which would be huge changes to the company's simple business model that has been profitable for most of the past five decades.
“We will adapt as our customers’ needs adapt,” Jordan said at an industry event hosted by Politico earlier this month.
