Southwest cuts unit revenue outlook on government shutdown

February 20, 2019

(Reuters) – Southwest Airlines Co cut its forecast for first-quarter revenue per seat mile on Wednesday, citing weak passenger demand and a $60 million hit from the longest partial U.S. government shutdown in history.

The United States’ fourth-largest airline by passenger traffic, which has been cancelling flights due to a conflict with maintenance staff and weather issues, cut its growth estimate for unit revenue to a range of 3 percent to 4 percent from a range of 4 percent to 5 percent.

Shares in the company, which said on Tuesday it would be investigating a doubling of the number of planes grounded with mechanical problems in recent days, fell 5 percent in early trading.

The company said that aside from the impact of the government shutdown, it was seeing continued improvement in the first-quarter average fares booked at the last minute.

“The company previously communicated an estimated negative revenue impact in the $10 million to $15 million range for January 1st through 23rd related to the … shutdown,” it said.

“Since then, the company has continued to experience softness in passenger demand and bookings as a result of the … shutdown.”

(Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva)

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