Southwest Airlines Co (NYSE: LUV) delivered
lower than expected adjusted earnings for the second quarter. Its revenue, which grew 5.3 percent, also failed to meet the Street
expectations.
The stock dropped 5.5 percent in the pre-market on Thursday.
Southwest Airlines said it earned $820 million or $1.28 per share in the second quarter, up from $608 million or $0.90 a share
in the prior year quarter. On an adjusted basis, it would have reported net income of $757 million or $1.19 a share compared to
$691 million or $1.03 a share in the year-ago quarter. This was short by $0.02 a share from the Street analysts.
The low-cost Airliner's revenue grew 5.3 percent to $5.38 billion from $5.11 billion in the previous year quarter, which fell
short of the Street predictions of $5.41 billion.
Commenting on the results, its Chairman, President, and CEO, Gary Kelly, stated, "Year-over-year, our second quarter 2016
operating revenue growth outpaced our available seat mile (ASM) growth, producing positive second quarter 2016 operating unit
revenue (RASM) growth, despite a very competitive fare environment. Demand for our low fares was strong throughout the quarter with
record load factors each month."
Southwest said that based on current bookings and yields, it expects RASM to fall 3 to 4 percent range in the third quarter on a
year-over-year basis.
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