Southwest Airlines revenues, hit by hurricanes and earthquake, fall short

Key Points
  • Southwest posts adjusted third-quarter earnings that beat expectations, but revenues fall short.
  • The airline canceled some 5,000 flights because of hurricanes and the Mexico City earthquake.
A Southwest Airlines jet takes off.
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Southwest Airlines posted a third-quarter adjusted profit of 88 cents a share on Thursday, narrowly beating Wall Street estimates, but revenues fell short of expectations.

Share prices were up 2.4 percent after shedding nearly 3 percent in Wednesday's regular session.

Expectations vs. results

  • Adjusted EPS: 88 cents vs. 87 cents expected in a Thomson Reuters survey of analysts.
  • Revenue: $5.27 billion vs. $5.31 billion expected in the Thomson Reuters survey.

Southwest, the United States' second-largest airline by market capitalization, said it had canceled some 5,000 flights by the end of September because of the powerful hurricanes that struck the southern U.S. and the Caribbean, as well as the deadly earthquake that hit Mexico City last month. The disasters shaved $100 million off passenger revenues in the quarter.

Southwest Airlines CEO: We had a solid third quarter despite hurricanes

The airline's revenue from each seat it flies a mile, a key industry metric, fell 0.5 percent in the quarter from a year earlier.

Revenue in the three months ended Sept. 30 was $5.27 billion, slightly lower than analyst estimates of close to $5.31 billion.

Investors will be eager to hear from Southwest executives about pressure from other no-frills carriers, as well as how the airline is faring amid the roll-out of basic economy fares on large full-service airlines. Southwest is also likely to provide more detail about fuel costs and its plans to start selling tickets to Hawaii as early as next year.

Before the call, CEO Gary Kelly told CNBC that demand for Las Vegas flights fell in the wake of the shooting massacre at an outdoor concert there earlier this month.

"It's a revenue softness," he said, adding that demand is "gradually" recovering.