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(Sharecast News) - Shares in Southwest Airlines plummeted on Thursday after the carrier announced plans to pull out of four airports to improve its financial performance, as it reported a wider-than-expected loss for the first quarter and trimmed its annual guidance.
The company reported an adjusted net loss of €218m for the quarter, compared with a loss of $163m the year before, with the adjusted loss per share widening to 36cents from 27cents, slightly worse than the 34cents estimate.
Southwest said it has made the "difficult decision" to close operations at Bellingham International Airport, Cozumel International Airport, Houston's George Bush Intercontinental Airport, and Syracuse Hancock International Airport.
"To improve our financial performance, we have intensified our network optimisation efforts to address underperforming markets," said president and chief executive Bob Jordan.
Jordan said that achieving financial goals was the company's "immediate imperative", and the recent news about further aircraft delivery delays at Boeing presents "significant challenges for both 2024 and 2025".
"We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our customers," he said.
First-quarter revenues increased 10.9% year-on-year to a record $6.3bn, though shy of the company's own forecasts, while revenues per available seat miles or RASM were flat - at the low end of company guidance. This was due to lower-than-expected close-in leisure passenger volume, including lower-than-expected maturation of development markets, Southwest said.
Looking ahead, the company is guiding to ASM growth of around 4% in 2024, down from a previous target of 6%, while economic fuel costs per gallon are now expected to be $2.70-2.80 compared with previous guidance of $2.55-2.65.
What's more, Southwest slashed its capital spending target for the year to $2.5bn, having previously expected to spend $3.5-4.0bn.
Shares finished the session down 7% at $27.26.