:max_bytes(150000):strip_icc()/GettyImages-2153943681-49b6abb4ade64f249e7b4e016f2cce9a.jpg "Southwest Airlines Cuts Outlook on Slower Bookings")
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Key Takeaways
- Southwest Airlines cut its revenue per available seat mile (RASM) guidance for the second quarter on weaker bookings.
- The carrier explained that it was having issues in adapting revenue management to its booking patterns in what it called a “dynamic environment.”
- Southwest said that despite the booking softness, it expects a record quarter for operating revenue.
Southwest Airlines (LUV) shares fell Wednesday as the carrier slashed its guidance because of softer bookings.
The airline wrote in a Securities and Exchange Commission (SEC) filing that it now sees current-quarter revenue per available seat mile (RASM) to be 4.0% to 4.5% lower year-over-year, compared with its earlier forecast of 1.5% to 3.5% lower.
Southwest Having Issues Adapting in ‘Dynamic Environment’
The company said the change was primarily driven by “complexities in adapting its revenue management to current booking patterns in this dynamic environment.”
In addition, Southwest now anticipates that its cost per available seat mile (CASM), “excluding fuel and oil expense, special items, and profitsharing,” will be 6.5% to 7.5% above last year, after previously predicting no change.
However, the company explained that despite the lowered expectations, it believes it will set an all-time high for operating revenue in the period. It pointed out that operational performance in the quarter thus far “continues to be strong with minimal cancellations.”
Shares of Southwest Airlines fell 1.4% to $28.13 as of 10:32 a.m. ET Wednesday and are about 2.7% lower for the year.