Southwest Airlines preps for revenue drop after fatal accident, scales back growth

Key Points
  • Southwest pulled marketing after Flight 1380 in April.
  • A passenger was killed after one of the Boeing 737's fan blades broke off.
  • Southwest expects a 3 percent decline in revenue for the quarter.
Southwest Airlines preps for revenue drop after fatal accident

on Monday said it expects revenue to fall in the second quarter after a decline in bookings following a deadly engine failure aboard one of its flights in April.

Southwest, which carries more travelers within the U.S. than any other airline, forecast a 3 percent drop compared with a year ago, in the revenue it generates per each seat it flies a mile, a key industry metric. The airline had warned of a 1 percent to 3 percent drop in operating revenue per available seat mile in April following the accident after it pulled marketing.

Southwest, a low-cost airline with peppy advertising campaigns, changed its website and tone after the April 17 accident. A fan blade broke off one of Southwest's Boeing 737's engines when a New York to Dallas flight was flying above 30,000 feet. Debris scattered, rupturing a window and partially sucking one passenger out of the opening. The plane made an emergency landing in Philadelphia. The passenger died.

Airline seats and passengers get the squeeze

Southwest also warned that it is trimming its growth plans this year because of a surge in fuel prices, increasing capacity, or the number of seats it offers, in the low 4 percent range from a previous plan of around 5 percent.

Southwest's shares gained 1.4 percent Monday, but they're still down more than 21 percent so far this year. The NYSE Arca Airline index is down more than 8 percent in 2018.

NTSB: Southwest engine showed signs of metal fatigue