Investors more or less knew the first-quarter report from Southwest Airlines Co (NYSE:LUV) wouldn’t be great. Ditto for the second-quarter outlook. There’s just something about seeing it in writing, however, that hit home for LUV shareholders.

The airline will survive. It’s arguably one of the better-managed ones, figuring out how to operate in a niche that’s neither red carpet service nor a low frills, deep discount operation. The airline business is one with a lot of moving parts though, and is not only cyclical but caters to a consumer base that’s unfairly (though understandably) fickle.

That’s the long way of saying LUV looks headed into some turbulence for the foreseeable future.

Southwest Airlines Earnings Recap

For the quarter ending in March, Southwest Airlines turned $4.94 billion worth of revenue into a per-share profit of 75 cents. Both were well up from year-ago comparisons, when the company booked earnings of 58 cents per share of LUV stock on a top line of $4.85 billion. And, the bottom line was a penny better than analyst expectations.

Sales, however, fell short of the $5.02 billion analysts had been modeling.

Between that shortcoming and a drop in bookings following an engine malfunction that took the life of one of its passengers last week, LUV stock struggled on Thursday, losing more than 2% of its value by mid-day.

CEO Gary Kelly commented on the first quarter numbers “With regard to our first quarter performance, our strong profits are a solid start to the year, and our margins are among the top in the industry. Year-over-year growth in operating revenues kept pace with our capacity growth, and costs per available seat mile were also comparable with first quarter last year.”

Drilling Down

Kelly wasn’t wrong regarding steady costs per seat mile, and revenues did indeed keep pace with capacity added during the quarter. It wasn’t a perfectly ideal quarter though. Passenger revenue yields fell nearly 3%, with the average passenger fare per trip falling 4.9% year-over-year. Southwest’s load factor improved from 79.9% to 81.5%.

In other words, Southwest Airlines is getting less for doing more.

Underscoring that idea is the fact that rival Spirit Airlines Incorporated (NYSE:SAVE) also fell short of revenue estimates for its recently-completed quarter. It may be an indication that a price war is “on,” even if the airlines aren’t saying as much.

It’s a bomb United Continental Holdings Inc (NYSE:UAL) first dropped on all investors in January, vowing to match any price offered by any competitor for the same flight… including discount airlines like Allegiant and Spirit. The company has dialed back the rhetoric since then, as well as partially curbed expansion plans. The gauntlet has already been thrown down, however, in investors’ eyes as well as other airlines.

American Airlines Group Inc (NASDAQ:AAL) also warned shareholders that profits would be lower than previously expected this year due to rising fuel costs that wouldn’t be passed along to passengers.

And then, of course, Southwest Airlines is struggling with a sweeping concern that its planes are unsafe, following last week’s in-flight engine blowout that took the life of one passenger when a fan blade broke free from the jet engine on a 737 and was hurled toward the fuselage.

While it was a freak accident and largely unpredictable to the airline, consumers are quick to make mental connections.

Looking Ahead for LUV Stock

For the quarter currently underway, Southwest believes the accident could push its revenue per seat flown down as much as 3%. The company didn’t detail how that would ultimately impact earnings per share of LUV, but in an environment where fuel prices are already rising and ticket prices are not, the Q2 consensus profit estimate of $1.52 per share has to be called into question.

American Airlines CEO Doug Parker may have summed up the situation Southwest Airlines is facing here as well, explaining after he reeled in American’s profit guidance, “Fuel prices have risen very quickly. I view that as a near-term problem. It’s one the industry can handle over time, but it doesn’t happen immediately.”

With the stock down 17% year-to-date though, and still inching lower, time may be the one thing LUV stock owners aren’t keen on granting.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.