Southwest's Revenue Falls 3.4%

Southwest Airlines Co.'s revenue fell in the latest period, hurt in part by a technology outage in August that plagued service, as the carrier said Wednesday an important industry metric would decline in the current quarter.

Unit revenue—an important metric in the airline industry that measures the amount taken in per seat flown a mile—fell 4.1% in the September quarter; Southwest guided for a 3% to 4% drop. For the fourth quarter, which ends in December, the company expects unit revenue to decline between 4% 5%.

The company said the outages in July dented revenue by $55 million, while a change in accounting methodology led to a one-time special revenue adjustment of $172 million.

U.S. carriers have benefited from lower fuel expenses, but after two years of record profitability, new capacity growth has pushed unit revenues lower.

Over all, Southwest posted a profit of $388 million, or 62 cents a share, down from $584 million or 89 cents a share, a year earlier. Excluding special items, the company earned 93 cents a share.

Revenue fell 3.4% to $5.14 billion.

Analysts surveyed by Thomson Reuters were looking for earnings of 88 cents a share on $5.17 billion in revenue.

Shares fell 7% to $39 in light premarket trading.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

October 26, 2016 07:45 ET (11:45 GMT)

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