Southwest's Stock Falls After Profit, Sales Miss Expectations

Shares of Southwest Airlines Co. dropped 2.4% in premarket trade Thursday, after the air carrier reported second-quarter profit and revenue that missed expectations and provided a downbeat outlook for the current quarter. Earnings for the quarter ended June 30 rose to $820 million, or $1.28 a share, from $608 million, or 90 cents a share, in the same period a year ago. Excluding non-recurring items, adjusted earnings per share came in at $1.19, below the FactSet consensus of $1.21. Revenue increased to $5.38 billion from $5.11 billion, missing the FactSet consensus of $5.40 billion. For the third quarter, Southwest expects Revenue per available seat mile (RASM) to decline in the 3%-4% range, and it expects unit costs to increase by about 2%. The company expects to launch a $250 million accelerated share repurchase program in the third quarter. The stock has lost 2.4% year to date through Wednesday, while the S&P 500 has gained 6.3%.