Southwest Airlines earned $193 million in the third quarter, 30% less than its profit a year ago.
FILE - Employees stand by an empty Southwest Airlines ticket counter Tuesday, April 18, 2023, in Oklahoma City. Southwest Airlines reports earnings on Thursday, Oct. 26, 2023 – Southwest Airlines' third-quarter profit fell 30% to $193 million despite record revenue as leisure travel boomed over the summer.Southwest predicted Thursday that a key measure of pricing power will fall sharply in the fourth quarter and it will scale back its aggressive growth plans early next year.
The results, and particularly Southwest's plans to throttle back on growth, are likely to add to concerns that demand for domestic travel, the heart of Southwest’s business, could weaken.The airline's profit is down from $277 million a year ago and, excluding special items, worked out to 38 cents per share. That matched Wall Street expectations, according to a FactSet survey of analysts.Labor costs rose by $406 million, an increase of more than 17%.
The airline expects fourth-quarter passenger-carrying capacity to increase 21% compared with the same period last year. Southwest said it will cut that growth in half in the first quarter of next year — to between 10% and 12%, four points less than previously planned. CEO Robert Jordan said that Southwest is slowing its growth rate in 2024 “to absorb current capacity, mature development markets, and optimize schedules to current travel patterns.”
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