Shares of Southwest Airlines Co. slumped toward a more-than nine-year low after the air carrier reported third-quarter revenue and load factor that missed forecasts, as last-minute bookings disappointed.
The stock
LUV,
fell 2.5% in premarket trading, to put it on track for the lowest opening price since April 2015.
Net income fell to $193 million, or 31 cents a share, from $277 million, or 44 cents as share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of 38 cents was the same as the FactSet consensus.
Revenue rose 4.9% to a third-quarter record of $6.53 billion, but was below the FactSet consensus of $6.57 billion.
While leisure demand was “strong,” particularly in July and during the Labor Day holiday, close-in bookings were lower than expected in August and September. Close-in bookings refer to flights booked within 21 days of departure.
Revenue per available seat mile (RASM) fell 6.8%, near the low end of guidance for a decline of 3% to 7%, due to close-in bookings weakness.
Load factor dropped to 80.7% from 85.4%, well below the FactSet consensus of 83.0%, as traffic rose 6.2% to 35.62 billion revenue passenger miles while capacity jumped 12.5% to 44.17 billion available seat miles.
“As we move into 2024, we are slowing our ASM growth rate to absorb current capacity, mature development markets, and optimize schedules to current travel patterns,” said Chief Executive Bob Jordan.
Looking ahead, the company expects fourth-quarter revenue per available seat mile (RASM) to fall 9% to 11%, while capacity is expected to jump approximately 21%. Fuel costs are expected to be $2.90 to $3.00 per gallon in the fourth quarter, up from $2.78 per gallon in the third quarter.
The stock has plunged 34.9% over the past three months through Wednesday, while the U.S. Global Jets ETF
JETS,
has shed 30.2% and the S&P 500
SPX,
has lost 8.3%.
