Southwest Airlines’ stock price fell on Thursday after the Dallas-based company reported record quarterly earnings of $7.04 billion.
The price was down nearly 9.6% as of 1:15 p.m. CT as investors reacted to news that Southwest was adjusting flight schedules and expecting to see revenue per seat decline this fall.
“Although our network is largely restored, it is not yet optimized. We are working to align our network, fleet plans, and staffing to better reflect the current business environment,” Chief Executive Bob Jordan said during a conference call.
Southwest reported adjusted earnings of $1.09 per share, lower than $1.30 per share from a year ago. Southwest’s revenue of $7.04 billion beats analyst estimates of $6.98 billion.
“In contrast to beats so far this earnings season, Southwest reported a largely in-line [second quarter],” with third-quarter outlook “well short of expectations on lower revenue and higher cost,” Raymond James analyst Savanthi Syth said, according to MSN.
Southwest said that revenue per seat fell 8.3% in the second quarter and projected it would drop by between 3% and 7% in the third quarter, compared to last year, Associated Press reported.
Southwest’s forecast “will amplify concerns around slowing domestic air travel demand,” Cowen airline analyst Helane Becker told AP.
Jordan told investors that some revenue ratios were down because travelers were using vouchers provided by the airline for disrupted holiday travel in December.
The CEO reported the average one-way fare on Southwest was $179.44, nearly 3% lower than last summer.
“As far as I can tell, we see really strong demand for Southwest Airlines,” Jordan said on CNBC.
Another complication for Southwest has been union negotiations with pilots and flight attendants. There is an industry-wide shortage of pilots, AP reported earlier this year.
“It’s a great time to be negotiating as a pilot,” Jordan said, according to AP.
The airline also has said it wants to increase its footprint in North Texas, as previously reported by The Dallas Express.
“We’re full up at Love Field,” said Ryan Green, executive vice president at Southwest Airlines, in a speech to the Downtown Rotary Club in Fort Worth, per reporting from Fort Worth Report.
By the close of trading on Thursday, Southwest stock had edged up slightly to 33.01 per share, down 8.96% for the day.