A Southwest Airlines passenger jet lands at Chicago Midway International Airport in Chicago, Illinois, on December 28, 2022.
Kamil Krzaczynski | AFP | Getty Images
Southwest Airlines said Thursday it plans to slow its capacity growth next year, citing moderating travel demand as booking patterns shift back to pre-pandemic norms.
Southwest will expand its flying between 10% and 12% in the first quarter of 2024 from a year earlier, down from a previous forecast of as much as 16% growth, Southwest said in an earnings release. It expects to grow between 6% and 8% for the full year 2024, it said.
Airlines have expanded their flying this year, while travelers have returned to more traditional booking, traveling during peak vacation periods or holidays. That capacity expansion has driven airfare lower.
Last year, executives cited high amounts of traditionally off-peak travel coupled with a shortage of aircraft and other challenges that kept fares high.
Here’s how Southwest performed in the third quarter compared with Wall Street expectations according to consensus estimates from LSEG, formerly known as Refinitiv:
- Adjusted earnings per share: 38 cents vs. an expected 38 cents
- Total revenue: $6.53 billion vs. an expected $6.57 billion
Southwest forecast unit revenue, the amount an airline brings in for each seat it flies a mile, would drop between 9% and 11% from a year earlier in the fourth quarter, with capacity up about 21%.
“As we move into 2024, we are slowing our [available seat mile growth] rate to absorb current capacity, mature development markets, and optimize schedules to current travel patterns,” CEO Bob Jordan said in a quarterly earnings release.
Southwest’s net income in the third quarter dropped 30% from a year earlier to $193 million, or 31 cents per share, while revenue advanced 4.9% to $6.53 billion. Adjusting for the impact of labor contract adjustments and other one-time items, the company earned 38 cents per share.