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Southwest Airlines Co. (NYSE:LUV) fell sharply in premarket trading after the airline carrier provided a business update.
The company said its operational performance in Q2 continues to be strong, with minimal cancellations so far. Completion factor quarter-to-date has averaged approximately 99.5%, despite challenging weather in Texas and Florida.
Based on revenue performance to date, Southwest Airlines (LUV) now expects Q2 2024 revenue per available seat mile to decline year-over-year in the 4.0% to 4.5% range, compared with its prior expectation of a 1.5% to 3.5% decline. The reduction in Southwest Airlines’ (LUV) RASM expectations was noted to be driven primarily by complexities in adapting its revenue management to current booking patterns in this dynamic environment. Capacity is expected to be up 8% to 9% for the quarter. Southwest Airlines (LUV) sees slightly higher debt payment payments and interest expenses for the quarter. Despite lowered expectations, Southwest Airlines continues to expect an all-time quarterly record for operating revenue in Q2.
Looking ahead, Southwest Airlines (LUV) said it remains “intensely focused” on improving its financial results and creating value for its shareholders as it continues to develop and implement its portfolio of strategic initiatives aimed at enhancing the customer experience, delivering operational excellence, creating new and meaningful revenue opportunities, expanding margins, and achieving return on invested capital well above the weighted average cost of capital.
Shares of Southwest Airlines (LUV) were down 6.45% in premarket trading.