Southwest Airlines (NYSE:LUV) saw its shares slip in premarket trading Thursday despite reporting Q2 earnings and revenue that beat analyst estimates.
The US carrier posted Q2 earnings per share (EPS) of $0.58, surpassing the consensus estimate of $0.52. Revenue came in at $7.35 billion, also ahead of the consensus projection of $7.32 billion.
Still, the company’s shares fell more than 2% in the pre-open trade.
Southwest reported an adjusted operating income of $405 million, compared to the estimated $334.5 million.
Available seat miles (ASMs) were 46.25 billion, marking an 8.6% increase year-over-year and slightly above the estimate of 46.22 billion. Revenue passenger miles (RPMs) were 38.22 billion, a 7.6% year-over-year increase but below the estimate of 38.34 billion.
Looking ahead, Southwest projects ASMs to rise by about 2% year-over-year in Q3.
The airline also said it is engaged in ongoing discussions with Boeing (NYSE:BA) and anticipates delays in aircraft deliveries, planning for about 20 -8 aircraft deliveries in 2024.
For Q3, Southwest expects unit revenue to range from flat to a 2% decline year-over-year, with a positive inflection anticipated in Q4.
"Our second quarter performance was impacted by both external and internal factors and fell short of what we believe we are capable of delivering," CEO Bob Jordan stated.
Alongside earnings, Southwest Airlines also announced it is making significant changes to its business model for the first time in 53 years, introducing assigned seating and extra legroom seats to boost revenue.
Starting next year, the carrier will offer flights with extra legroom seats. moreover, the airline will begin overnight flights in February.
More information about these changes will be shared at the company's investor day at the end of September.