NEW YORK (TheStreet) -- Southwest Airlines (LUV) shares are climbing 3% to $37.98 on heavy volume in afternoon trading on Monday after CEO Gary Kelly said that the airline would cap seating growth expansion at 7%, reversing earlier expectations of 8% growth.
"We don't want to grow 8%, we're not going to grow 8% and we can easily trim the schedule to stick to 7%," Kelly told Bloomberg.
The company previously said it expects seat capacity to grow between 7% and 8% this year, and between 6% and 7% next year.
As a result Southwest also forecast that PRASM, passenger revenue per available seat mile, a key indicator of airline profitability, will decline by about 3% year over year this quarter.
Other airline stocks have also gained today on Southwest's news with Delta (DAL) and American Airlines (AAL) up 3.66% and 4.48%, respectively.
TheStreet Ratings team rates SOUTHWEST AIRLINES as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOUTHWEST AIRLINES (LUV) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins."