Southwest bookings down, revenue expected to follow
DALLAS — Southwest Airlines says bookings are down since the fatal accident on one of its planes last week.
The company said yesterday that it expects revenue per mile, which tracks average prices, will drop between 1 percent and 3 percent in the Aprilthrough-June quarter. It said that 1 to 2 percentage points of the decline is due to slower sales since the April 17 accident that killed a passenger.
Southwest disclosed the weaker bookings as it reported a 22 percent increase in first-quarter profit, to $463 million. The results were in line with Wall Street expectations.
The financial ups and downs, however, were overshadowed by the emergency on one of Southwest’s planes last week that killed one passenger when its engine failed. It was the first accident-related death of a passenger in the airline’s 47-year history.
“It remains a somber time” at the airline, CEO Gary Kelly said in a statement.
He repeated condolences to the family of the woman who died when a piece of the exploding engine hit the plane, pledged to cooperate with accident investigators, and said Southwest “will never compromise” on safety.
Analysts believe that any loss in bookings because of the accident will be temporary. JP Morgan’s Jamie Baker said no other airline has reported gaining at Southwest’s expense — although he noted it would be poor etiquette for other carriers to do so — and that any booking away from Southwest will be shortterm.
The airline also announced that it plans to fly to four cities in Hawaii, not just Honolulu. That decision raises the stakes in a looming competition with Hawaiian Airlines and other carriers that fly to the islands from the West Coast. The Southwest flights are expected to start late this year or early in 2019.
Southwest also said it will lease coveted takeoff and landing slots at LaGuardia Airport in New York and Washington Reagan National Airport just outside the nation’s capital from Alaska Airlines, allowing it to expand at two airports that are essentially full.