Southwest Airlines quarterly profit slides 30% and says growth will slow next year
Southwest Airlines earned $193 million in the third quarter, 30% less than its profit a year ago
DALLAS — Southwest Airlines' third-quarter profit fell 30% to $193 million despite record revenue as leisure travel boomed over the summer, and the airline is losing pricing power at the same time that labor costs are rising.
Southwest said Thursday that it will throttle back growth plans next year because of changes in travel, including a disappointingly slow recovery in business travel.
“The whole sector is under pressure obviously. Costs are rising, and a lot of that is labor cost,” CEO Robert Jordan said on CNBC.
The results, and particularly Southwest’s plans to grow more slowly, are likely to add to concern that demand for domestic travel — the heart of Southwest’s business — is weakening.
Shares of Southwest Airlines Co. slid more than 3% after the market opened, but had cut the loss to less than 1% in late-morning trading.
Jordan declined to say that Southwest has added too many flights, but he conceded that lucrative business travel has not recovered as quickly as the airline expected. He added that leisure flyers are returning to pre-pandemic patterns, so demand for tickets drops off more sharply in shoulder seasons such as fall and late winter.
Peak periods, however, remain strong. Jordan said bookings for upcoming holidays — Thanksgiving and Christmas — are running ahead of last year's pace.
Still, Southwest forecast that pricing power will weaken sharply in the fourth quarter. Revenue for each seat flown one mile, a closely watched measure of prices, will decline 9% to 11% in the fourth quarter compared with the same period last year. That is a much sharper drop than those anticipated by Southwest's larger
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