The American airline Southwest Airlines' share price is plummeting by 10 per cent in futures trading on Wall Street following a downgraded forecast for the second quarter. Other airline shares are also being dragged down.
Southwest Airlines' revenue per passenger kilometre – a profitability metric – is expected to fall by 4.0–4.5 per cent year-on-year during the quarter. The previous forecast was 1.5–3.5 per cent.
Despite profitability issues, operating revenues for the quarter are expected to reach a record level, and operationally the business is doing well, according to Southwest Airlines, with very few cancelled flights.
What do you think?