Southwest depends heavily on leisure travel within the United States and doesn’t offer business class and other high-end perks. Fuel prices have been rising recently, however, and Southwest expects to pay more per gallon in the fourth quarter than it did in the third. The airline saved $186 million in the third quarter because fuel was cheaper than a year earlier. Southwest likely will be forced to accept similar terms for its pilots, who picketed at company headquarters in Dallas on Thursday. Pilots at American, Delta and United have received pay raises totaling around 40% over four years. Southwest has agreed to new contracts with several labor groups including flight attendants this week, but it is the only one of the nation’s four biggest airlines that has not yet settled with pilots, the most expensive group. Labor costs rose by $406 million, an increase of more than 17%. Bookings close to departure were lower than expected in August and September. Revenue rose $305 million, or 5%, to $6.52 billion, just short of projections for $6.56 billion. That matched Wall Street expectations, according to a FactSet survey of analysts. Southwest’s third-quarter profit slipped from $277 million a year ago and, excluding special items, worked out to 38 cents per share. airlines, “likely bodes well for future pricing trends.” Raymond James airline analyst Savanthi Syth said the capacity cuts are deeper than investors expected and, along with similar slow-growth plans by other U.S. Southwest said it will cut that growth in half in the first quarter of next year - to between 10% and 12%, four points less than previously planned.īy the second half of next year, Jordan said, Southwest will fly fewer seats than it will in the same period this year. The airline expects fourth-quarter passenger-carrying capacity to increase a stunning 21% compared with the same period last year. That underperformance is likely the reason that Southwest will scale back its aggressive growth plans early next year. That is a much sharper drop than those anticipated by Southwest’s larger rivals. Revenue for each seat flown one mile, a closely watched measure of prices, will decline 9% to 11% in the fourth quarter compared with the same period last year. Still, Southwest forecast that pricing power will weaken in the fourth quarter. Southwest executives said bookings for Christmas are running ahead of last year’s pace. Chief Commercial Officer Ryan Green said on a call with analysts that the sales run “when we have distressed inventory to sell” but aren’t available on high-demand flights. Southwest has fought back by increasing the frequency of fare sales to fill seats.
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