Southwest Airlines says bookings have dropped since last week's fatal accident on one of its planes.
The company said Thursday that it expects sales per mile, which tracks average prices, will fall between 1 percent and 3 percent in April-to-June quarters. It is reported that about 2 percentage points of the decline is attributable to the decline in sales since the April 17 accident.
Southwest announced weaker bookings as first-quarter earnings increased 22 percent to $ 463 million. The results met Wall Street expectations. However, the financial ups and downs were overshadowed by the emergency landing of one of Southwest's planes in Philadelphia last week, which killed a passenger when its engine failed. It was the first accidental death of a passenger in the airline's 47-year history.
"There remains a gloomy time" at the airline, CEO Gary Kelly said in a statement. He thanked the family of the woman who died when part of the exploding engine hit the plane, promised to cooperate with accident researchers, and said that the Southwest will never "compromise" on safety.
The airline also announced that it plans to fly to four cities in Hawaii, not just Honolulu. This decision increases the importance of emerging competition with Hawaiian Airlines and other airlines flying from the West Coast to the islands. Southwest flights are expected to begin later this year or in early 201
Southwest also said it will be renting coveted launch pads at New York's LaGuardia Airport and Washington Reagan National Airport just outside the capital of Alaska Airlines will expand to two airports that are essentially full.
Lower income taxes helped Southwest overcome lower average rates and higher fuel and labor costs in the January-to-March quarter. Taxes declined 28 percent year-on-year, bringing the Dallas-based airline $ 54 million
Excluding items such as fuel hedging, Southwest earned 75 cents a share, corresponding to the forecast of Zacks Investment analysts Research
Sales increased 2 percent to $ 4.94 billion. That was a Southwest record for the first quarter, but it fell short of the $ 5.02 billion analysts expected in the Zacks survey.
Southwest increased revenue to $ 146.33 despite a decline of almost 5 percent in the average one-way fare – a bit of short breaks and competition on major routes. However, the airline carried 6 percent more passengers, and the average flight was fuller – 81.5 percent of the seats were sold, compared with 79.9 percent a year earlier.
Labor costs rose 5 percent and fuel costs grew 6 percent. But Southwest said the cost increases would be modest in the second quarter, even with possible pay increases for mechanics and what it called a preliminary estimate of the expenditures related to the fatal accident – Southwest did not give a figure for them.
Southwest shares have fallen 18 percent since the beginning of the year, while the Standard & Poor's 500 index has fallen slightly more than 1 percent. The stock has fallen by about 6 percent in the last twelve months.
Southwest's shares had fallen about 5 percent before the bell.