(Reuters) -Southwest Airlines reported a third-quarter profit on Thursday that fell about 30% on soaring labor and fuel costs and the budget carrier said it expects higher aircraft deliveries from Boeing in 2023.
The company’s shares were down 5.2% in premarket trading.
Earnings at U.S. airlines have been pressured due to a surge in jet fuel prices during the July-September quarter, primarily driven by tighter supplies of crude oil.
Last month, Southwest Airlines raised concerns about rising fuel costs and weaker leisure bookings in August, citing seasonality trends.
The company’s total expenses rose 10% to $6.41 billion in the quarter, partly attributable to higher labor rates for all employee workgroups, according to Southwest.
“As we move into 2024, we are slowing our available seat miles growth rate to absorb current capacity … and optimize schedules to current travel patterns,” Southwest Airlines CEO Bob Jordan said on Thursday.
Analysts have been calling on airlines to cut capacity to protect their pricing power amid indications of weakening domestic travel demand.
Southwest expects fourth-quarter operating revenue per available seat mile, a proxy for pricing power, to decrease by 9% to 11% compared with last year.
However, the company said it expects record operating revenue in the fourth quarter.
Southwest Airlines also forecast capacity to increase by 15% in the current quarter, once adjusted for the operational disruption faced by Southwest in December last year.
The airline, one of Boeing’s biggest MAX customers, said it expects 85 deliveries of the 737-8 jet this year compared with its previous expectations of 70, despite the planemaker’s recent quality issues.
Southwest Airlines reported a profit of $193 million, or $0.31 per share, in the third quarter, from $277 million, or $0.44 per share, a year earlier.
Total operating revenue rose 4.9% to $6.53 billion.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shounak Dasgupta)
