Southwest Airlines Cuts Revenue Guidance In Wake Of Hurricanes, Earthquake

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Southwest Airlines ( LUV ) on Thursday cut its third-quarter unit revenue outlook in the wake of hurricanes that have sheared through Texas and Florida and left Puerto Rico without electricity and the earthquakes that have devastated large parts of Mexico.

[ibd-display-video id=2323629 width=50 float=left autostart=true]The forecast comes as the impact from the storms continues to add up for the airlines. United Airlines ( UAL ) () this month lowered its Q3 unit revenue outlook due to the impact of Hurricane Harvey. American Airlines ( AAL ) followed, cutting its unit revenue forecast after Hurricane Irma forced 40 airports to close in Florida and the Caribbean, including the carrier's Miami hub.

It also comes as airlines across the globe suffered from flight delays due to a "network issue" at a flight booking system run by Amadeus IT Group, according to Bloomberg.

Southwest on Thursday said it expects third-quarter operating unit revenue, or an airline's revenue in relation to its overall flight capacity, to be flat to down 1%, compared with a forecast of down 1% to "slightly up" given earlier this month. Before that, the carrier expected a 1% gain in the key metric.

The carrier said it had canceled roughly 5,000 flights through Sept. 27 due to the natural disasters. And it said it expects the disasters to cost around $100 million.

The company now sees third-quarter operating unit up, excluding fuel, oil and other items, to rise in the 3%-4% range.

Southwest also cited the "current industry revenue environment" in cutting its unit revenue guidance. Lower fares, combined with higher fuel costs, have prompted the industry to temper its outlook for unit revenue for the third quarter. United, in particular, has been engaged in an airfare battle with Spirit Airlines ( SAVE ) at some of United's largest hubs.

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Investors may have already priced in the impact of recent natural disasters. Southwest rose 0.5% to 56.17 in the stock market today , while United advanced 0.4%. Delta Air Lines ( DAL ) climbed 1.2%, American Airlines 1.4% and Spirit 0.1%.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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