A Southwest Airlines jetliner lands at Midway International Airport in Chicago, Illinois, December 28, 2022.
Kamil Krzaczynski | AFP | Getty Images
Southwest Airlines said Thursday it plans to slow capacity growth next year, citing moderating travel demand as booking patterns return to pre-pandemic norms.
Southwest will increase flights between 10% and 12% in the first quarter of 2024 from a year earlier, down from a previous forecast of growth of up to 16%, Southwest said in an earnings release. It expects growth of between 6% and 8% for the whole of 2024, it said.
Airlines have expanded flights this year, while travelers have returned to more traditional bookings, traveling during peak holiday or holiday periods. This capacity expansion has driven down airfares.
Last year, executives cited high numbers of traditionally off-peak travel, coupled with a shortage of planes and other challenges that kept fares high.
Here’s how Southwest performed in the third quarter compared to Wall Street expectations, according to consensus estimates from LSEG, formerly known as Refinitiv:
- Adjusted earnings per share: 38 cents against 38 cents expected
- Total income: $6.53 billion versus $6.57 billion expected
Southwest’s forecast unit revenue, or the amount an airline brings in for each seat flown a mile, would decline between 9% and 11% from a year earlier in the fourth quarter, with capacity up about 21%.
“As we approach 2024, we are slowing our rate (of growth in available seat miles) to absorb current capacity, mature development markets and optimize schedules based on current travel patterns,” the CEO said Bob Jordan in a quarterly earnings release.
Southwest’s third-quarter net income fell 30% from a year earlier to $193 million, or 31 cents per share, while revenue rose 4.9% to $6.53 billion. . Taking into account the impact of employment contract adjustments and other one-time items, the company earned 38 cents per share.
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