Southwest Airlines shares tumble 9% as costs rise, unit revenue slips
Southwest Airlines Boeing 737-700 aircraft as seen landing at dusk time at Ronald Reagan Washington National Airport DCA in Arlington County, Virginia over the Potomac River in the United States of America flying over water and buildings.

Southwest Airlines shares tumbled nearly 9% Thursday after the airline reported lower unit revenue and higher costs for the second quarter — and said the trends are likely to continue this quarter.

The Dallas-based airline's second-quarter unit revenue dropped 8.3% from a year earlier, Southwest said, citing a policy change last summer that removed expiration dates from Covid pandemic travel credits.

The carrier said it expects unit revenue to fall as much as 7% during the third quarter on capacity up 12% from a year earlier. It blamed "challenging comparisons from the pent-up travel demand surge in 2022, and higher than seasonally-normal growth."

Airlines have enjoyed record revenue in recent months, but airfare in the U.S. has dropped from 2022, according to the latest inflation read.

Southwest said it is "revamping" 2024 schedules to reflect changing customer demand as business travel revenue recovers but lags pre-pandemic levels.

"We are working to align our network, fleet plans, and staffing to better reflect the current business environment," CEO Bob Jordan said in an earnings release.