Southwest Airlines just surprised everyone by posting a profit for the third quarter. They’re expecting a strong finish to the year, thanks to growing travel demand and higher ticket prices.
The airline predicts that its revenue will increase by 1% to 3% in the fourth quarter, while capacity will rise by 6% compared to last year. This outlook, however, hinges on maintaining strong demand through the end of the quarter.
Here’s a quick look at Southwest’s performance compared to expectations:
- Earnings per share: Adjusted to 11 cents, against a predicted loss of 3 cents.
- Revenue: Reached $6.95 billion, slightly above the expected $6.92 billion.
Earlier in July, Southwest downgraded its profit forecast for 2025, expecting full-year earnings before taxes to drop to between $600 million and $800 million, down from $1.7 billion. They confirmed this forecast again this week.
Southwest is changing its strategies to stay competitive. They’ve started selling seat assignments and moving away from long-held policies like open seating and offering two free checked bags.
In an interview with CNBC, CFO Tom Doxey mentioned that sales from seat assignments should improve in the first quarter, coinciding with the end of open seating.
Despite these shifts, the company’s third-quarter profit dipped over 19% year-over-year, dropping to $54 million from $67 million. Adjusting for one-time items, their earnings came to $58 million, or 11 cents a share. Revenue did see a slight uptick of 1% compared to last year.
Interestingly, a recent study showed that 72% of travelers prioritize affordability over comfort when booking flights. As airlines like Southwest adapt to this trend, it’s clear that understanding consumer preferences will be vital for future success.
For more detailed financial insights, you can check out their official report.
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