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Southwest Airlines Co. tumbled as much as 8.2 percent in early trading after reporting that a key industry revenue measure may drop more sharply this quarter.
Revenue from each seat flown a mile will decline between 4 percent and 5 percent, the Dallas-based airline said in a statement Wednesday. That compares with a 4.1 percent drop in the third quarter.
“They are guiding to a sequential worsening” in unit revenue, Joe DeNardi, a Stifel Nicolaus & Co. analyst, said in an interview. “That’s it.”
Southwest was down 6.7 percent at 7:12 a.m. in New York before the start of regular trading.
Southwest said last month it would follow American Airlines Group Inc. and Delta Air Lines Inc. in slowing 2017 growth to gain the ability to boost ticket prices. U.S. carriers have been discounting fares for more than a year as growth has run ahead of demand. Southwest’s average fare per mile fell 4.9 percent.
The airline reported that adjusted third-quarter earnings slipped to 93 cents a share, compared with the 88 cent average of analysts’ estimates compiled by Bloomberg. Sales dropped 3.4 percent to $5.14 billion as average fares declined, Southwest said. Analysts had expected $5.16 billion.
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©2016 Bloomberg L.P.
This article was written by MARY SCHLANGENSTEIN from Bloomberg and was legally licensed through the NewsCred publisher network.