Southwest Airlines saw 'unusual' discounting by rivals in November: CEO
By Jeffrey Dastin
NEW YORK (Reuters) - Southwest Airlines Co LUV.N saw a lot of "unusual" discounting by larger U.S. rivals after bookings were lower than expected for last-minute travel around Thanksgiving, Chief Executive Gary Kelly told reporters in New York Thursday.
The cheaper fares prompted the budget airline on Tuesday to lower its forecast for revenue per available seat mile in the fourth quarter to between flat and down a percent, from an earlier forecast of up 1 percent, compared to a year earlier.
Southwest's stock plummeted 9 percent as a result.
Kelly said a U.S. State Department warning about travel after the Nov. 13 Paris attacks that killed 130 people may have impacted U.S. bookings. He also said lower gasoline prices may have persuaded people to travel by car rather than air.
"We're just being cautious about what to expect here in December and the Christmas season," Kelly said to reporters of the revised forecast, speaking during a gathering of aviation executives and analysts known as the Wings Club.
He added that the strength of the economy was his biggest concern, pointing to a collapse in oil prices as a pain-point for economic stability, capital investment and jobs. He called U.S. Gross Domestic Product growth of around 2 percent "anemic."
Kelly also said the U.S. Federal Reserve should raise interest rates, adding that a hike would benefit Southwest because of its low debt and "will actually boost our interest income because we've got $4 billion sitting in (the bank) not making a whole lot."
Shares of Southwest were up about 2 percent in early afternoon trading Thursday.
(Reporting by Jeffrey Dastin in New York; Editing by Chizu Nomiyama and Andrew Hay)
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