Photographer: Patrick T. Fallon/Bloomberg

Southwest Air Sees $100 Million Hit From Hurricanes, Earthquakes

Updated on
  • Disasters force weaker outlook for benchmark revenue gauge
  • Carriers also contend with fare battles, higher fuel costs

Southwest Airlines Co. said third-quarter sales will take a $100 million blow from this year’s devastating hurricanes and earthquakes.

About 5,000 flights had been canceled through Wednesday because of the natural disasters, the carrier said in a statement Thursday. Southwest also pared its outlook for revenue from each seat flown a mile, saying the benchmark gauge would be little changed in the third quarter even in a best-case scenario. Previously, it said the figure would potentially increase “slightly.”

The natural disasters are compounding other problems that have weakened the financial outlook at U.S. airlines recently, including fare battles, higher fuel costs and feeble demand for pricey, last-minute tickets. Delta Air Lines Inc., United Continental Holdings Inc. and American Airlines Group Inc. all lowered their revenue estimates earlier this month.

Southwest said costs for each available seat flown a mile will increase 3 percent to 4 percent in the current quarter from a year earlier. Previously, the Dallas-based carrier had projected that costs would rise no more than 3 percent.

The shares rose less than 1 percent at 9:54 a.m. in New York. Southwest advanced 12 percent through Wednesday, the biggest gain on a Standard & Poor’s index of the five biggest U.S. airlines.

Flights to Puerto Rico are still limited after the island was battered by Hurricane Maria. Earlier this month, Hurricane Irma pounded Florida and the Caribbean, while two earthquakes in Mexico took more than 400 lives.

United suspended operations at its Houston hub for four days earlier in the quarter and scrubbed more than 7,400 flights because of Hurricane Harvey, the company disclosed earlier this month.

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