Airline company Southwest Airlines Co. (NYSE: LUV) slid in pre-market trading on Thursday after the company reported earnings for its third quarter of FY23. The airline’s adjusted earnings came in at $0.38 per share, as compared to $0.50 in the same period last year, but was in line with consensus estimates of $0.38 per share.
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Southwest delivered record third quarter operating revenues of $6.5 billion, up by 4.9% year-over-year. However, they fell short of analysts’ expectations of $6.6 billion.
Bob Jordan, President and CEO of Southwest Airlines commented, “As we move into 2024, we are slowing our ASM [available seat mile] growth rate to absorb current capacity, mature development markets, and optimize schedules to current travel patterns.”
Looking forward, management now expects operating revenue per available seat mile (RASM) to decline in the range of 9% to 11% in the fourth quarter, with available seat miles likely to be up by around 21% year-over-year. In FY23, the airline anticipates available seat miles (ASM) to rise by 14% to 15%.
Is LUV a Good Buy Now?
Analysts remain sidelined about LUV stock with a Hold consensus rating based on five Buys, 10 Holds and two Sells. The average LUV price target of $32.62 implies an upside potential of 38.2% at current levels.
