Skift Take
Southwestâs third-quarter earnings beat Wall Street estimates, a bright spot for the carrier that has been fending off an activist investor for months.
Southwest Airlines reported Thursday that it is seeing strong bookings for the holiday travel season and healthy demand as it deals with an activist investor.
The carrierâs third-quarter results beat Wall Street estimates, with a net income of $67 million and revenues of $6.9 billion. Southwest is expecting revenue to rise for the fourth quarter.
However, the carrier said it expects cancellations from Hurricane Milton and a reduction in capacity to put some pressure on its costs in the current quarter.
Southwest forecasts that Milton will knock “just under one-half point” off its unit revenues for the fourth quarter, describing the storm and resulting cancellations as a “headwind.”
Southwest partly attributed its better-than-expected third quarter results to an industry-wide moderation in domestic capacity.
âWe are laser-focused on delivering the robust set of tactical and strategic initiatives included in our plan and returning to the strong financial performance we expect,â said CEO Bob Jordan in an earnings release.
Commenting on the results, Jay Shabat, Airline Weekly senior analyst said: “Southwest suffered another weak quarter this summer, underscoring its urgency to make changes. Exposure to the oversupplied U.S. domestic market was one major issue in Q3, but this situation eased as summer turned to fall, thanks to heavy capacity cutting by Southwest and others.”
Southwest executives unveiled a plan to boost its profitability during its investor day in September. Some of the changes include premium and assigned seating, red-eye flights, airline partnerships and cutting capacity in underperforming areas.
The company said it expects the plan to add $4 billion before interest and taxes to its earnings by 2027.
Southwest is holding a call with analysts to discuss its third-quarter earnings at 12:30 p.m. ET.
Southwest CEO Bob Jordan is due to speak at the Skift Aviation Forum in Dallas on November 12. Click here to see the full agenda and buy your ticket.
Airlines Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.
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