Southwest Cuts Unit Revenue Outlook on Tech Outage

Southwest Airlines Co. on Wednesday lowered its unit revenue forecast in the current quarter due to last month's technology outage that resulted in delays and cancellation of over 2,000 flights.

The airline also reported passenger traffic growth of 1.4% in July from the same month a year earlier.

The company said the outage will lead to an unfavorable year-over-year impact to its third-quarter unit revenue. The company now expects its third-quarter unit revenue—a key metric in the airline industry—to decline, year-over-year, in the 3.5% to 4.5% range. It previously guided for a decline between 3% and 4%.

Southwest also now expects third-quarter operating expense per available seat mile, or CASM, excluding certain items, to increase between 3% and 4%, hurt by the tech outage. The company previously guided for CASM to increase 2%.

Dallas-based Southwest, which has grown over the past four decades mostly by flying exclusively within the continental U.S., said last month its profit again soared above expectations in the most recent quarter, propelled by cheap fuel and unit-revenue growth. It is expected to next report results in October.

For July, capacity at the airline climbed 2.3%, while load factor—the percentage of seats filled—edged down 0.8 percentage points to 86.9% from 87.7% in the year-ago period.

Shares of Southwest, which have declined 13% over the past three months, were inactive premarket.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

August 10, 2016 08:15 ET (12:15 GMT)

Southwest Airlines (NYSE:LUV)
Historical Stock Chart
From Mar 2024 to Apr 2024