The airline offered the latest guidance in a shareholder update released Wednesday, June 26, 2024.

 

Revenue Decline Due to Adapting “Revenue Management to Current Booking Patterns”

While the company offered good news that the completion factor to date is at an average of 99.5% “despite challenging weather in Texas and Florida,” their projection for revenue per available seat mile (RASM) would be lower than originally projected.

 

“Based on revenue performance to date, the Company now expects second quarter 2024 RASM to decline in the 4.0 percent to 4.5 percent range compared with its prior expectation of a 1.5 percent to 3.5 percent decline, both on a year-over-year basis,” the update reads. “The reduction in the Company’s RASM expectations was driven primarily by complexities in adapting its revenue management to current booking patterns in this dynamic environment.”

 

The “complexities in adapting its revenue management to current booking patterns” could be in reference to their internal systems, ranging from their decision to not offer flights through global distribution systems or other IT-related problems. Southwest did break from their previous policy to only sell flights through their channels when they began marketing their flights through Google in May 2024.

 

The update comes as activist investors within the company are moving for a wholesale change to the carrier’s leadership. At the beginning of June 2024, Elliott Investor Management – which currently holds a $1.9 billion stake in the airline – called for the ouster of board chairman Gary Kelly and current CEO Bob Jordan due to perceived underperformance.

 

Despite the decrease in RASM, the airline expects to hit an “all-time quarterly record for operating revenue in second quarter 2024,” while continuing their dedication to enhancing the customer experience and providing a return on invested capital.

 

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Source: frugal travel guy