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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.
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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.

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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.

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NTSB: Southwest engine showed signs of metal fatigue