Southwest AirlinesThird-quarter profit fell from a 12 months ago but beat Wall Street estimates because the airline worked to generate revenue and fend off activist investor Elliott Investment Management.
Elliott and Southwest reached an agreement Thursday that averts a proxy fight and adds six activist candidates to the board. CEO Bob Jordan will keep his job as a part of the deal.
The Dallas-based airline forecast a fourth-quarter unit revenue increase of three.5% to five.5% on a 4% year-over-year decline in capability. It said costs, excluding fuel, were more likely to rise by as much as 13%.
“So far in the quarter, travel demand continues to be healthy and bookings to date for the holiday season are strong, demonstrating the continued resiliency of the leisure travel market,” Southwest said in an earnings release.
Other airlines have pointed to strong travel demand at the top of 2024 as airlines cut unprofitable capability, resulting in a drop in airfares.
Separately, Southwest last month laid out a three-year plan under which the corporate would increase its earnings before interest and taxes by $4 billion in 2027. The airline also said it had approved a $2.5 billion buyback and would cut underperforming flights from Atlanta to scale back costs.
Southwest said Thursday that it could repurchase $250 million of Southwest stock in an “accelerated” program as a part of its overall repurchase plan.
The airline plans to desert long-standing open seating and as a substitute charge for seats and offer additional legroom options at a better price, the largest changes in its greater than 50-year flying history.
According to LSEG consensus estimates, Southwest performed as follows within the third quarter in comparison with Wall Street expectations:
- Earnings per share: Adjusted 15 cents versus expected zero cents
- Revenue: $6.87 billion versus expected $6.74 billion
The company reported third-quarter revenue of $6.87 billion, up greater than 5% 12 months over 12 months. Net income fell 65% from the year-earlier quarter to $67 million, or 11 cents per share, but got here in above estimates. Adjusted for one-time items, the corporate reported net income of $89 million, or 15 cents per share, compared with analysts' forecasts of breaking even on an adjusted basis.
image credit : www.cnbc.com