DALLAS (AP) — Southwest Airlines’ first-quarter earnings fell 32 percent as it flew more passengers but took in less revenue on average from each one. Rising costs for fuel and labor weighed on the airline.
The Dallas company on Thursday posted earnings of $351 million, down from $513 million in the same period in 2016. Per-share earnings fell to 57 cents from 79 cents.
Earnings adjusted for non-recurring costs came to 61 cents per share, a penny shy of Wall Street expectations, according to a survey Zacks Investment Research was for earnings of 62 cents per share.
The airline posted revenue of $4.88 billion in the period, up 1 percent but also shy of Street forecasts for $4.89 billion.
The disappointing quarter appeared to drag down the entire sector before the opening bell Thursday, with shares of Delta, United and American also feeling some selling pressure.
American Airlines Group Inc., which reports earnings Thursday, fell almost 4 percent.
Revenue for each seat flown one mile by Southwest, a proxy for average fares, fell 2.6 percent in the quarter. The carrier expects that figure to be positive in the second quarter, a sign that a long period of declining fares could be coming to an end for Southwest and the airline industry.
Southwest is paying out higher compensation to employees under new labor contracts. Costs for salaries, wages and benefits rose 13 percent to $1.73 billion. In addition, its costs for fuel rose 8 percent. The company has also been spending on a new reservation system, which it expects to launch next month.
Shares of Southwest Airlines Co. slumped nearly 5 percent before the opening bell.
Southwest carries more passengers in the U.S. than anyone, although its smaller international network places it behind American, Delta and United in total size.
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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on LUV at https://www.zacks.com/ap/LUV
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