Southwest Airlines Co reported a wider-than-expected first-quarter loss due to a pre-tax charge related to mass cancellations in December and flagged 20 fewer deliveries of the MAX jets this year from Boeing Co. Shares of the largest U.S. domestic airline dropped 3.4% before the bell. However, Southwest forecast "solid profits" in the current quarter on strong summer bookings and joined rivals in allaying fears of a slowdown in travel due to a worsening economic outlook.
"Demand for domestic air travel remains strong, thus far," said CEO Bob Jordan, at a time cost pressures due to high labor and fuel expenses weigh on the industry. The airline, one of Boeing's biggest MAX customers, said it expects 70 deliveries of the 737-8 jet this year instead of the planned 90 after the U.S. planemaker disclosed a manufacturing issue with some of the workhorse aircraft. Delay in MAX deliveries is expected to increase operating costs for airlines and limit their ability to meet travel demand, hitting revenue.
Southwest revised annual capacity growth outlook to between 14% and 15%, from 15% to 16% forecast earlier. The company expects "solid profits" in the second quarter as well as the full year, but did not provide specific numbers. Analysts polled by Refinitiv expect an adjusted profit per share of $1.05 for the second quarter and $2.73 for 2023. Dallas, Texas-based Southwest also expects revenue per seat flown one mile to fall 8% to 11% in the quarter through June, partly due to a policy change that eliminated expiration dates on qualifying flight credits.
It booked a pre-tax charge of $380 million and reported a loss of 27 cents per share for the first quarter, wider than analysts' average expectation of a loss of 23 cents per share, as per Refinitiv data. Revenue for the quarter through March rose about 22% to $5.71 billion, slightly below expectations of $5.73 billion.