A Southwest Airlines passenger jet lands at Chicago Midway International Airport in Chicago, Illinois, on December 28, 2022.
Kamil Krzaczynski | AFP | Getty Images
Southwest Airlines said Thursday it plans to slow its capability growth next yr, citing moderating travel demand as booking patterns shift back to pre-Covid pandemic norms.
Southwest will expand its flying between 10% and 12% in the primary quarter of 2024 from a yr earlier, down from a previous forecast of as much as 16% growth, Southwest said in an earnings release. It expects to grow between 6% and eight% for the total yr 2024, it said.
Airlines have expanded their flying this yr, while travelers have returned to more traditional booking, traveling during peak vacation periods or holidays. That capability expansion has driven airfare lower.
Last yr, executives cited high amounts of traditionally off-peak travel coupled with a shortage of aircraft and other challenges that kept fares high.
Here’s how Southwest performed within the third quarter compared with Wall Street expectations in keeping with consensus estimates from LSEG, formerly generally known as Refinitiv:
- Adjusted earnings per share: 38 cents vs. an expected 38 cents
- Total revenue:Â $6.53 billion vs. an expected $6.57 billion
Southwest forecast unit revenue, the quantity an airline brings in for every seat it flies a mile, would drop between 9% and 11% from a yr earlier within the fourth quarter, with capability up about 21%.
“As we move into 2024, we’re slowing our [available seat mile growth] rate to soak up current capability, mature development markets, and optimize schedules to current travel patterns,” CEO Bob Jordan said in a quarterly earnings release.
Southwest’s net income within the third quarter dropped 30% from a yr earlier to $193 million, or 31 cents per share, while revenue advanced 4.9% to $6.53 billion. Adjusting for the impact of labor contract adjustments and other one-time items, the corporate earned 38 cents per share.
Ultra-low-cost carrier Spirit Airlines on Thursday also said it was reviewing its growth plans after posting a third-quarter lack of $157.6 million, from a $36.4 million loss last yr. The corporate forecast negative margins within the last three months of the yr, citing weaker demand even for year-end holidays.
“Softer demand for our product and discounted fares in our markets led to a disappointing final result for the third quarter 2023,” CEO Ted Christie said in an earnings release. “We proceed to see discounted fares for travel booked through the pre-Thanksgiving period.”
(JetBlue Airways is trying to accumulate Spirit, though the Justice Department has sued to dam the deal. The trial is scheduled to start out next week.)
Fellow discounter Frontier Airlines swung to a $32 million loss within the third quarter from a $31 million profit through the same period last yr. That carrier also forecast negative margins for the fourth quarter.
Southwest shares were down lower than 1% in afternoon trading, while Spirit fell over 5% and Frontier was up greater than 4%.
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