Southwest Airlines Shares Fall After Downward Revision To Revenue Outlook

Shares of Southwest Airlines Co LUV fell more than 4 percent Wednesday morning after the company said the U.S. government shutdown will impact first-quarter revenue more than previously expected.

Southwest Airlines said in a regulatory filing it has revised its estimated negative revenue impact from the government shutdown from a prior range of $10-$15 million to around 60 million. The company attributed the revision to "softness in passenger demand and bookings as a result of the government shutdown."

Why It's Important

The airliner's downward revision in revenue guidance impacted other financial metrics closely watched by investors. Southwest Airlines said it now expects first-quarter revenuer per available seat mile (RASM) guidance from 4-5 percent to a new range of 3-4 percent.

Southwest Airlines was also downgraded by Goldman Sachs from Neutral to Sell. The research firm said it expects the airliner to show margin underperformance in 2019 in part due to the delay in its ability to announce its Hawaii flights and start selling tickets, CNBC reported the analysts as saying.

The company may also need to discount fares to Hawaii more than previously expected if there is a shortened selling window for the initial flights.

The stock traded down 4.2 percent at $55.25 per share at time of publication.

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