Southwest Airlines has lowered its revenue forecast for the current quarter, citing challenges in adapting to current booking patterns.
The company announced on Wednesday that it expects a decline in revenue per available seat mile (RASM) of 4% to 4.5% for the June quarter. Previously, Southwest had forecasted a decline of 1.5% to 3.5%.
The shares of Southwest closed down 0.2% at $28.45. They have fallen by 1.5% since the beginning of the year.
The low-cost flight pioneer is under pressure from Elliott Investment Management, an activist investor who has demanded significant changes this month to improve Southwest's financial performance.
On Wednesday, Elliott stated that the repeated lowering of the forecast was another sign that Southwest's leadership urgently needed to be replaced.
Unfortunately, this is another example of why a fundamental leadership change at Southwest is urgently needed," said the hedge fund.
Southwest declared that it continues to have confidence in its strategy and leadership.
Delays in the delivery of Boeing aircraft have burdened Southwest with excessive overhead costs and hampered its growth plans. The airline has announced its intention to take decisive measures to improve its finances. In April, Southwest stated that it would withdraw from underperforming markets and fine-tune its revenue management systems to better meet demand.
Southwest Airlines Considers Radical Changes to Its Lean Business Model to Attract New Customers and Increase Revenue, Including Seat Assignments and Adding Rows with More Legroom. Details to Be Presented at Investor Day in September.
Despite a record number of passengers this summer, several airlines are also struggling with weak profits. Analysts have stated that most airlines expanded too aggressively in the second quarter, which is affecting fares, and that high fuel and labor costs are squeezing profit margins.
Southwest stated that it still expects to achieve record sales in the second quarter.
In April, Southwest reported that its revenue in the first quarter had increased by more than 10% to $6.33 billion, but had missed analysts' expectations of $6.42 billion. The quarterly loss widened to $231 million, compared to $159 million in the previous year.
The company had posted profits for 47 consecutive years until the pandemic brought air travel to a halt in 2020. The airline suffered another setback at the end of 2022 when a travel planning crisis during the holidays led to the cancellation of nearly 17,000 flights.
