Southwest reports second quarter earnings

Southwest Airlines reported a net income of $367 million, or $0.58 per diluted share, in its second quarter 2024 earnings report. Its operating revenues were $7.4bn during the period, up 4.5% over the same period last year and beating original estimates. Operating expenses were up 11.4% to approximately $7bn. The airline's unit revenue declined 3.8% in the quarter compared to last year as capacity growth outpaced demand. In addition, it estimated some headwind from revenue management challenges after it sold an excess number of seats for the peak summer travel period ""too early in the booking curve"", it said in the report. ""We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement longer-term transformational initiatives that are designed to drive meaningful top and bottom-line growth,"" said Southwest president, CEO & vice chairman of the board of directors Bob Jordan. In a major shift to its strategy, Southwest Airlines has also launched premium seating options as well as assigned seating in conjunction with its earnings release. Southwest were the first to pioneer the low-cost carrier concept and the move seems to symbolise the evolving demand of air travel customers. ""Our implementation of assigned and premium seating is part of an ongoing and comprehensive upgrade to the customer experience, one that research shows customers overwhelmingly prefer,"" added Jordan. The airline is also introducing redeye flights - departing in the evening and arriving in the morning - in order to better utilise its fleet and optimise its network. Activist investor Elliott Investment Management had called for similar changes after acquiring a near $2bn stake in the company. The move may also signify an attempt to defend against the investor's demands for change. For the third quarter, Southwest anticipates its unit revenue to be flat to a negative 2%. Capacity is expected to be up around 2%. At the quarter's end, it had $11bn in liquidity, exceeding its debt outstanding of $8bn. The airline will host its investor day in late September where it will provide details on its new customer initiatives and operational plans.