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Southwest Airlines (LUV), a major airline, saw its shares fall in premarket trading on Thursday. This was after the carrier retracted its full-year earnings forecasts and announced that it would reduce capacity due to “macroeconomic uncertainties.”
The Dallas-based carrier reported an adjusted loss $0.13 per share, on revenue of $6.4 billion. Visible Alpha polled analysts who expected an adjusted loss per share of $0.18 on revenue of $6.39 Billion.
The carrier stated that although its Q1 results exceeded expectations, due to “the current economic uncertainty, it is difficult for us to forecast, given recent and brief booking trends,” as well as the fact that it is withdrawing their earnings before interest and tax (EBIT), outlooks for both this year and next.
The report comes at a time of great change for Southwest Airlines. Last month, Southwest said it would introduce baggage fees and a basic economy ticket option amid pressure from activist investor Elliott Investment Management. It previously announced an end to its famed open seating policy last summer. Many changes will be implemented by the end of next month.
"Looking ahead, we are confident in the initiatives we have outlined and the value we expect them to produce. We are committed to executing on these plans while controlling what we can control," CEO Bob Jordan said. "To that end, we are reducing capacity in the second half of this year. These incremental schedule adjustments are in progress, and based on current estimates, we now expect our full year 2025 capacity to be up roughly 1%, year-over-year."
Southwest Airlines shares fell 3% in advance of the opening bell. The shares were down nearly 25% for the year.
