Southwest Airlines (LUV) Q2 2024 Results

Southwest Airlines Third-quarter unit revenue was forecast to fall Thursday as an oversupplied U.S. market forced airlines to discount tickets during what is typically the most lucrative period of the year.

Southwest said unit revenue for the current quarter could fall as much as 2% from last year and non-fuel costs could rise as much as 13%, with higher expenses weighing on the airline through the end of 2024.

Here’s how Southwest performed in the second quarter compared to Wall Street expectations, according to LSEG consensus estimates:

• Earnings per share: 58 cents adjusted compared to the 51 cents expected
• Revenue: $7.35 billion versus the $7.32 billion forecast

The Dallas-based airline said its second-quarter revenue rose 4.5% from a year ago to $7.35 billion, a record, but its profit fell more than 46% to $367 million, or 58 cents a share. Revenue per available seat mile, a gauge of airlines’ pricing power, fell 3.8%, roughly in line with the airline’s lowered forecast last month.

Southwest reported adjusted earnings per share of 58 cents per share, above analysts’ expectations.

“Our second quarter performance was impacted by external and internal factors and fell short of what we believe we are capable of delivering,” Chief Executive Bob Jordan said in an earnings release.

Southwest said Thursday it is in talks to receive compensation from Boeing Its sole aircraft supplier is struggling to deliver planes on time because of its safety and manufacturing crises. Southwest said it continues to expect only 20 Boeing deliveries this year, less than half of what it had previously forecast.

The airline is in the midst of a restructuring as pressure mounts from investors to do more to boost revenue. Elliott Investment Management disclosed a nearly $2 billion stake in the airline last month and called for a leadership change.

On Thursday morning, Southwest announced it is scrapping its open-seating plan and offering some seats on its Boeing planes that have more legroom and adding overnight flights — the biggest changes to its business model in its more than five decades of flying. The changes, set to begin next year, would make Southwest more like its network airline rivals.

“We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement long-term transformation initiatives that are designed to drive significant top-line and bottom-line growth,” Jordan said in the statement.

Delta airlines and united airlines Executives said earlier this month that they expect U.S. capacity to begin to moderate in August, which could lead to higher rates.