Southwest Falls Short as Costs Rise
April 27 2017 - 8:33AM
Dow Jones News
By Imani Moise
Southwest Airlines Co. earnings fell in the most recent quarter
as rising costs continued to outpace revenue growth.
Shares fell 4.3% to $54.50 premarket as the nation's largest
discount air carrier missed analysts' expectations for profit and
sales.
Operating expenses increased 8.8% during the first quarter while
revenue edged up 1.2%.
The Dallas-based company expects costs to rise about 6% in the
current quarter. Chief Executive Gary Kelly said cost inflation
should ease significantly in the back half of the year.
Labor costs at the airline are rising after Southwest signed new
contracts with its pilots and flight attendants last year.
Additionally, the company is contending with accelerated
depreciation on a flock of older Boeing Co. 737s it intends to
retire this fall.
Higher fuel prices and strong demand for lower fares have
pressured airlines industrywide. Southwest also recorded a
quarterly fuel-hedge loss of $106 million.
In all for the first quarter, Southwest reported a profit of
$351 million, or 57 cents per share, down from $513 million, or 80
cents per share, a year earlier. Excluding certain items, the
airline earned 61 cents per share, down from 88 cents per share
last year. Revenue rose 1.2% to $4.88 billion.
Analysts were looking for earnings of 63 cents per share on
$4.92 billion in revenue.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
April 27, 2017 08:18 ET (12:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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