Southwest Airlines Co. experienced a 6% decline in premarket trading on Thursday, following the announcement that its revenue has not yet returned to pre-pandemic levels. The airline aims to adapt its 2024 flight schedule in response to changing customer patterns. Despite these challenges, Southwest Airlines reported second-quarter earnings indicating a net income of $683 million, or $1.08 per share, compared to $760 million, or $1.20 per share, in the same period last year.
The airline’s adjusted earnings per share came in at $1.09, matching the FactSet consensus, while revenue reached a record high of $7.037 billion, surpassing the FactSet consensus of $6.997 billion. The surge in revenue can be attributed to an increased demand for leisure travel.
Southwest Airlines’ Chief Executive, Bob Jordan, announced that the company expects a pre-tax profit contribution of $1.0 billion to $1.5 billion by the end of 2023 from strategic initiatives proposed during the Investor Day in December 2022. Looking ahead, the airline anticipates a profitable outlook and record operating revenue for the third quarter of 2023, along with year-over-year margin expansion for the full year.
While Southwest Airlines has restored a significant portion of its network, it acknowledges that optimization is yet to be achieved. To address this, the airline is currently working on aligning its network, fleet plans, and staffing to better suit the current business environment.
For the third quarter, Southwest Airlines estimates a decline of 3% to 7% in revenue per available seat mile, with available seat miles projected to increase by 14% to 15% for the entire year.
Despite these recent challenges, Southwest Airlines’ stock has seen a 7% increase year-to-date, while the S&P 500 has observed a 19% gain.