Southwest Airlines Stock Sink on Higher Costs Warning

Southwest Airlines stock took a hit on Thursday due to warnings about higher costs.

Southwest Airlines Stock Sink on Higher Costs Warning

Southwest Airlines (NYSE:LUV) notes that it is expecting costs to increase for the fourth quarter of 2018, as well as in 2019. Specifically, the company notes that it will be seeing fuel prices increase when compared to previous periods.

When it comes to the fourth quarter of 2018, the bad news for Southwest Airlines stock is that the company expects fuel prices to be between $2.30 and $2.35 per gallon. This will have it paying significantly more for fuel than in the fourth quarter of 2017. That period has fuel prices of $2.16 per gallon.

Southwest Airlines also says that it is expecting fuel prices for the full year of 2019 to range from $2.35 to $2.40 per gallon. The increasing fuel prices will eat into the company’s profits and is bad news for Southwest Airlines stock.

All of this news puts a damper on what was otherwise a solid earnings report for the third quarter of 2018. This includes airline company reporting earnings per share of $1.08. This is up from its earnings per share of 88 cents from the same time last year. It also just barely comes in above Wall Street’s earnings per share estimate of $1.07 for the quarter.

Southwest Airlines’ revenue for the third quarter of the year came in at $5.78 billion. This is an increase over the company’s revenue of $5.30 billion. It also beats out analysts’ revenue estimate of $5.57 billion for the period.

LUV stock was down 6% as of Thursday and is down 17% year-to-date.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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