A Southwest Airlines aircraft takes off from Hartsfield-Jackson Atlanta International Airport (ATL) in Atlanta, Georgia, United States, on Friday, July 12, 2024.
Elijah Nouvelage | Elijah Nouvelage Bloomberg | Getty Images
Southwest Airlines Third-quarter profit fell from a year earlier but topped Wall Street expectations, while the carrier’s employees struggled to boost revenue and fend off activist investor Elliott Investment Management.
The Dallas-based airline on Thursday forecast fourth-quarter unit revenue growth of 3.5% to 5.5%, but with capacity down 4% from a year earlier. The company said costs, excluding fuel, could rise 13%.
“Travel demand remains healthy so far this quarter and holiday season bookings are strong so far, demonstrating the continued resilience of the leisure travel market,” Southwest Airlines said in its earnings report.
Other airlines point to strong travel demand into 2024 as airlines reduce unprofitable capacity, causing airfares to fall.
Separately, Southwest Airlines last month laid out a three-year plan to increase earnings before interest and taxes by $4 billion in 2027. repurchase and will cut underperforming flights from Atlanta to cut costs.
Southwest Airlines said Thursday it will repurchase $250 million worth of Southwest shares through an “accelerated” program under its overall repurchase program.
The airline plans to abandon its permanently open seats and instead charge for seats and offer extra legroom options at higher prices, the biggest change in its more than 50 years of flying.
Here’s how Southwest’s third-quarter performance compared to Wall Street expectations, according to the London Stock Exchange Group’s (LSEG) consensus forecast:
- Earnings per share: 15 adjusted cents compared to the expected zero cents
- income: US$6.87 billion, expected US$6.74 billion
The company reported third-quarter revenue of $6.87 billion, an annual increase of more than 5%. Net profit fell 65% from a year earlier to $67 million, or 11 cents per share, but beat expectations. After adjusting for one-time items, the company reported net income of $89 million, or 15 cents per share, while analysts forecast it would break even on an adjusted basis.
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