Southwest Airlines reservations down after fatal accident

DALLAS — Southwest Airlines says bookings are down since the fatal accident on one of its planes last week.

The company said Thursday that it expects revenue per mile, which tracks average prices, will drop between 1 percent and 3 percent in the April-through-June quarter. It said that about 2 percentage points of the decline is due to slower sales since the April 17 accident that killed a passenger.

Southwest, the busiest commercial air carrier operating at McCarran International Airport, disclosed the weaker bookings as it reported a 22 percent increase in first-quarter profit, to $463 million. The results were in line with Wall Street expectations.

The financial ups and downs, however, were overshadowed by the emergency landing of one of Southwest’s planes in Philadelphia last week after an engine blew apart, knocked out a window, and killed a passenger. It was the first accident-related death of a passenger in the airline’s 47-year history.

“It remains a somber time” at the airline, CEO Gary Kelly said in a statement. He repeated condolences to the family of the woman who died, pledged to cooperate with accident investigators, and said Southwest “will never compromise” on safety.

The Dallas-based airline also announced that it plans to fly to four cities in Hawaii, not just Honolulu. That raises the stakes in a looming competition with Hawaiian Airlines and other carriers that fly to the islands from the West Coast. The Southwest flights are expected to start late this year or early in 2019.

Southwest has indicated it plans convenient connecting flights from Las Vegas through California to Hawaii and isn’t committing to nonstop flights from McCarran to the islands. Las Vegas, frequently referred to as Hawaii’s “eighth island,” sees significant traffic to and from Hawaii, not only because of established ties through Boyd Gaming’s downtown Las Vegas properties but because the University of Hawaii plays in the same football conference as UNLV.

Southwest also said it will lease coveted takeoff and landing slots at LaGuardia Airport in New York and Washington Reagan National Airport from Alaska Airlines, allowing it to expand at two airports that are essentially full.

Lower income taxes helped Southwest overcome cheaper average fares and higher fuel and labor costs in the January-through-March quarter. Taxes dropped 28 percent from a year ago, saving the airline $54 million.

Excluding items such as fuel-hedging contracts, Southwest said it would have earned 75 cents per share, matching the forecast of analysts surveyed by Zacks Investment Research.

Revenue rose 2 percent to $4.94 billion. That was a Southwest record for the first quarter, but it fell short of the $5.02 billion that analysts in the Zacks survey had expected.

Southwest boosted revenue despite a drop of nearly 5 percent in the average one-way fare, to $146.33 — reflecting slightly shorter trips and competition on key routes. However, the airline carried 6 percent more passengers, and the average flight was fuller — 81.5 percent of seats were sold, compared with 79.9 percent a year earlier.

Labor costs rose 5 percent and fuel costs grew 6 percent. But Southwest said second-quarter cost increases would be modest, even with possible pay raises for mechanics and what it termed a preliminary estimate of expenses related to the fatal accident. Southwest did not give a figure for those.

Southwest shares have fallen 18 percent since the beginning of the year, while the Standard & Poor’s 500 index has decreased slightly more than 1 percent. The stock has fallen roughly 6 percent in the last 12 months.

Southwest shares fell 53 cents, 1 percent, to $53.30 a share on trading about twice the average volume and rebounded by 2 cents, less than 1 percent, to $53.32 a share in after-hours trading.

Review-Journal staff writer Richard N. Velotta contributed to this story.