A Southwest Airlines plane approaches Midway Airport on December 15, 2023 in Chicago. (John J. Kim/Chicago Tribune/Tribune News Service via Getty Images)
John J. Kim | Chicago Tribune | Getty Images
Southwest Airlines released a surprise third-quarter profit on Wednesday and said it expects to generate record sales in the final three months of the year thanks to better travel demand and higher fares.
The carrier said it expects unit revenue to increase between 1% and 3% in the fourth quarter, with capacity up 6% from the same period last year.
“This forecast range assumes demand strength remains at current levels through the end of the quarter,” Southwest said.
Here’s how Southwest performed in the period ended September 30 compared to Wall Street expectations, according to LSEG consensus estimates:
- Earnings per share: 11 cents adjusted versus expected loss of 3 cents
- Income: $6.95 billion versus $6.92 billion expected
In July, Southwest joined other airlines in cutting its profit forecast for 2025. The Dallas carrier said it expected full-year pretax profit of between $600 million and $800 million, down from an earlier forecast of $1.7 billion. It reaffirmed this earnings outlook on Wednesday.
The carrier is working to better compete with rivals and increase sales, abandoning long-standing policies such as open seating and two free checked bags for every traveler.
Southwest Chief Financial Officer Tom Doxey told CNBC in an interview that the increase in sales from selling seat assignments would show up in the first quarter, when the first flights without open seats begin.
Southwest’s third-quarter profit fell more than 19% year-over-year, from $67 million to $54 million. On a per-share basis, Southwest’s earnings fell to 10 cents from 11 cents a year earlier.
Including one-time items, Southwest reported third-quarter profit of $58 million, or 11 cents per share.
Revenue rose 1% to $6.95 billion from the year-ago period.