Updated from 1:13 p.m. ET
Southwest Airlines Co. (LUV) disappointed investors Thursday as it guided toward lower-than-expected current quarter unit revenue on the same day as commentary from Spirit Airlines Inc.'s (SAVE) earnings call dragged airline shares lower.
Southwest shares traded down nearly 5%, while shares in Spirit were down 18%. All of the major airlines were showing share price declines, with most declines in the range of 1% to 2%.Southwest said it expects current quarter revenue per available seat mile growth to be approximately 1% "which includes an estimated year-over-year unfavorable impact from the transition to the new reservation system of approximately 1 point."
The carrier said it doesn't expect the impact to continue beyond the current quarter.
In the second quarter, Southwest RASM grew 1.5%. The carrier said growth would have been higher, but the figure "included less than 1 point of temporary pressure attributable to the transition to the new reservation system. "
Speaking on CNBC, Southwest CEO Gary Kelly said the quarter "was right in line with our expectations." Kelly called the introduction of new reservations systems "flawless" but also said results included "some drag" from that new system that will get remedied shortly. For instance, he said, the introduction of a new boarding product "is a little bit more complicated to sell than our previous system."
Southwest reported earnings per share of $1.24, ahead of the consensus estimate of $1.20. Revenue rose 6.7% to $5.7 billion. The 1.5%-unit revenue gain was in line with expectations. Cost per available seat mile grew 5.3%, generally in line with expectations.