Southwest forecasts weaker reserves after a fatal accident

Southwest Airlines

LUV -0.09%

said on Thursday that the reservations had been affected by the fatal accident last week on a flight from New York to Dallas.

The largest national pbadenger operator in the US UU He said a closely watched income metric would fall between 1% and 3% in the second quarter, and most of the drop is attributed to the softness in the reserves since the April 17 accident.

Southwest's response to the accident has been widely praised throughout the industry, but the softness of its reserves contrasts with the strength reported by rivals in recent earnings calls.

"It is still a dark moment for the Southwest family after the accident of flight 1380," said the CEO

Gary Kelly

He said in prepared comments.

Southwest canceled flights to perform engine inspections throughout its fleet. As of Thursday, cancellations were still more than 1% of their 4,000 daily flights. Investors will look for more guidance on cancellations and Southwest's response to the accident in a call with executives later on Thursday.

For the current quarter, the company expects revenues per available seat mile to decrease between 1% and 3%. Southwest said that one to two percentage points was attributable to the recent softness in reserves.

Before the accident, badysts expected the income measurement to be flat at 2% less than a year earlier. The unit revenue of Southwest in the first quarter remained stable compared to the previous year, in line with the previous orientation after a weaker than expected spring break.

The airline expects to increase its capacity by 5% this year compared to 2017 and confirmed its plans to begin selling tickets in 2018 for flights to Hawaii from the west coast.

The airline is still in talks with regulators to obtain permission to fly its twin-engine Boeing 737 aircraft to four destinations in Hawaii: Honolulu International Airport, Lihue Airport, Kona International Airport in Keahole and Kahului Airport. Southwest has not confirmed the destinations of the West Coast or when it plans to launch services.

The Dallas-based operator reported a profit of $ 463 million in the quarter compared to $ 339 million the previous year, with earnings per share increasing to 79 cents from 55 cents the previous year. On a tight basis, earnings rose to 75 cents per share from 58 cents, a penny higher than badysts' consensus. Revenues rose 0.9% higher to $ 4.59 billion.

Southwest shares fell more than 3% in pre-market operations.

-Doug Cameron contributed to this article

Write to Imani Moise at [email protected]


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