A Southwest Airlines jet sits at Ellison Onizuka Kona International Airport in Kehole waiting for passengers on January 20, 2024 in Kailua-Kona, Hawaii.
Kevin Carter | Getty Images
Southwest Airlines On Wednesday, the company lowered its second-quarter revenue forecast, citing changing booking patterns.
Southwest expects revenue per available seat mile, the amount the airline earns for each seat it flies one mile, to decline 4 percent to 4.5 percent in the second quarter compared to a year ago, after a previous decline A decline of 1.5 to 3.5 percent had been forecast.
The company also said unit costs excluding fuel would rise up to 7.5% compared to the same period last year, after previously expecting no change.
The company said its capacity would increase by up to 9%, rather than seeing flat growth in the number of flights as previously expected.
Southwest continues to expect record operating revenue in the second quarter.
Airlines are seeing record numbers of passengers, but higher costs and capacity expansions have weighed on fares and profits.
“The reduction of the company’s RASM [revenue per available seat mile] “Expectations were driven primarily by the complexity of adapting revenue management to current booking patterns in this dynamic environment,” Southwest said in a filing.
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Other providers like delta And UnitedMeanwhile, passengers are excited about their passengers returning 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 again called for the replacement of CEO Bob Jordan and Chairman Gary Kelly on Wednesday.
Elliott said in a statement that the lowered outlook was “another example of the urgent need for a fundamental leadership change at Southwest.”
“Southwest is led by a team that has proven unable to adapt to the modern aviation industry; “Today’s press release from the company appears to confirm this,” Elliott said in his statement.
The Dallas-based airline has expressed confidence in its leadership and reiterated that it is considering revenue initiatives such as seat assignments or premium seating, which would mean massive changes to the company’s simple business model, which has been profitable for much of the past five decades.
“We will adapt as our customers’ needs change,” Jordan said at an industry event hosted by Politico earlier this month.
— CNBC’s Rohan Goswami contributed to this report.
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2024-06-26 18:00:11
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