Southwest Air is down as US airlines struggle with soaring fuel levels

Shares of the Dallas-based airline extended losses in aftermarket trading after Southwest declined to update its data profit guidance for the whole year at least $4 per share, highlighting the volatility of the industry.

Achieving those results would require lower fuel prices combined with stronger revenue, it said. It also forecast second-quarter adjusted earnings per share of 35 cents to 65 cents, against analysts’ expectations of 59 cents.

Southwest fell 3.8% to close at $39.35 on Wednesday, mirroring declines in other airline stocks.

Southwest’s decision is largely in line with other airlines struggling with fuel costs raised by the U.S.-Iranian war. A competitor’s driver Delta Air Lines Inc. has declined to update its full-year forecast, while others such as United Airlines Holdings Inc. and Alaska Air Group Inc. have revised or withdrawn the instructions.

In the first quarter, Southwest reported earnings per share of 45 cents, compared to analysts’ estimates of 46 cents. Revenue was $7.25 billion, compared with an average of $7.29 billion expected by analysts polled by Bloomberg.

Analysts are likely to press Southwest executives on an earnings call Thursday about the extent to which the airline can raise fares to offset higher fuel prices without alienating customers.

The airline is also in the midst of a major corporate overhaul that includes adding premium seats, lounges and other initiatives to improve its finances.

« Most of Southwest’s transition from premium seats to baggage fees has focused on improving the current core revenue per passenger, » Melius Research analyst Conor Cunningham said in a note. « With two domestic fare increases now in effect, Southwest may be most exposed to demand destruction among its peers. »