DALLAS (WBAP/KLIF News ) – Southwest Airlines reported a second-quarter profit of $682 million.
The Dallas-based carrier took in $7.04 billion in revenue, that’s higher than the just under seven billion analysts expected.
Southwest also reported an 8.3 % drop in unit revenue from a year earlier and higher costs for the quarter that ended June 30. The company cited a policy change last summer that removed expiration dates from pandemic travel credits.
The news cause the airline’s shares to slide about 8% during early trading Thursday.
Southwest said it expects unit revenue to fall as low as 7% during the third quarter on capacity up 12% from a year earlier.
The airline blamed “challenging comparisons from the pent-up travel demand surge in 2022.”
That’s when Southwest suffered an infamous holiday travel meltdown that resulted in thousands of canceled flights due to weather, staffing shortages and technology issues.
Southwest will discuss more details during an earnings call with analysts and media at 11:30 a.m. Thursday.
The airline is still dealing with what has become difficult labor talks with pilots and its flight attendants.
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Southwest CEO Bob Jordan issued this statement following the report:
“We are pleased to report a solid quarter amid continued strong demand. We generated all-time record quarterly operating revenues, produced a very strong operational performance, and delivered healthy net income. The resilient demand environment, especially for close-in leisure travel, drove second quarter 2023 operating revenue per available seat mile to the high end of our expectations. Further, we continue to expect $1.0 billion to $1.5 billion of pre-tax profit contribution in full year 2023 from strategic initiatives outlined at our Investor Day last December. Based on current revenue and cost trends, we expect record operating revenue and a profitable outlook again for third quarter 2023 and continue to expect year-over-year margin expansion for full year 2023.
“Our People delivered a very smooth and reliable operation in second quarter 2023, despite disruptive weather. We operated a record number of flights and carried a record number of Customers and bags, all while achieving a completion factor of more than 99 percent—our highest second quarter performance in the past 10 years. This solid operating performance has continued into July, where we have been able to minimize cancellations amid continued weather challenges throughout the network.
“I am very proud of, and grateful for, our amazing People and the great progress they made towards our goals in the first half of the year. To name only a few, we have largely restored our network, developed and are on-track with a robust winter operations plan, implemented a new revenue management system, and added necessary staffing to fully utilize our fleet, ahead of schedule, by the end of third quarter.
“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. While business revenues continue to recover, they are not back to pre-pandemic levels—therefore, we are revamping our 2024 flight schedules to reflect post-pandemic changes to Customer travel patterns. We estimate these meaningful network optimization efforts and the continued maturation of our development markets will contribute roughly $500 million in incremental year-over-year pre-tax profits in 2024, which we believe will support another year of margin expansion. As ever, we are committed to our goals of achieving industry-leading operational and financial performance, boosting our operational resilience, and widening our Customer Service advantage by enhancing our digital Hospitality.”
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