Southwest Airlines (LUV), the largest discount carrier in the U.S., has lowered its second-quarter revenue forecast, citing challenging bookings as the reason.
Southwest said in a news release that it expects revenue per available seat mile will decline between 4% and 4.5% year-over-year in the second quarter.
Previously, the airline had forecast that its revenue per seat mile would fall 1.5% to 3.5% during the quarter.
The company also said that its unit expenses, excluding fuel, would rise 7.5% from a year earlier in the current quarter. That’s up from a previous forecast of no change.
On a more positive note, Southwest said its capacity would rise as much as 9% in Q2, up from previous predictions of flat growth, and operating revenue will reach record levels.
Southwest added that it continues to see record numbers of passengers but higher costs are eating into its profits.
The revised second-quarter numbers come as Southwest Airlines is under pressure from activist hedge fund Elliott Management, which has called for chief executive officer (CEO) Bob Jordan and Chairman Gary Kelly to be replaced.
Elliott Management says Southwest continues to underperform and needs new management.
The airline has expressed confidence in its leadership team and reiterated that it is considering revenue-generating initiatives such as premium seating.
Southwest Airlines’ stock is down 4% on news of the lowered revenue forecast.
Prior to today (June 26), the company’s stock had fallen 16% over the past 12 months to trade at $28.51 U.S. per share.
