Oct. 23 at 5:25 PM
Southwest Airlines shares fell more than 7% Thursday even after the carrier beat third-quarter expectations, reporting record revenue of
$6.95 billion and adjusted earnings of
$0.11 per share—well above forecasts for a small loss. Despite the beat, investors were unimpressed as growth and margins remained under pressure.
Passenger revenue reached a record
$6.3 billion, up just 1% from a year earlier, while Ebitda fell to
$337.5 million from
$470 million. The airline expects “meaningful margin expansion” in the fourth quarter and full-year adjusted EBIT between
$600 million and
$800 million.
CEO Bob Jordan said Southwest is undergoing its most significant transformation ever, including charging for checked bags, introducing assigned seating, and adding extra-legroom sections—moves designed to generate new revenue. Analysts warn that these changes could alienate some loyal customers but acknowledge they may be necessary to offset higher labor and operating costs.
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