Southwest Airlines Navigates Economic Turbulence

Southwest Airlines has withdrawn its profit forecasts for 2025 and 2026 due to macroeconomic uncertainty. The airline aims to protect its margins by reducing capacity amidst declining travel spending. Financial results show a smaller-than-expected loss, and a call with analysts is scheduled for further discussion.

Southwest Airlines announced on Wednesday that it is retracting its profit forecasts for 2025 and 2026, attributing this move to uncertain macroeconomic conditions. The airline's stock saw a dip of around 4% in after-hours trading following the disclosure.

Previously, Southwest had projected earnings before interest and taxes of $1.7 billion for the current year and about $3.8 billion for the following year. However, fluctuating booking trends and a challenging economic environment prompted the reassessment. The airline industry at large continues to face tumult, exacerbated by former President Trump's trade policies.

With travel considered a non-essential expense, many consumers and businesses are cutting back, leading to weaker demand. Southwest noted a potential 4% dip in unit revenue for the current quarter. To buffer financial pressures, the airline plans to trim flight capacity while ensuring a marginal annual increase. The company reported a smaller-than-expected loss for the first quarter, ahead of a scheduled call with analysts to discuss these results further.

(With inputs from agencies.)