Southwest Airlines Earnings Top Estimates But Stock Slides

Southwest Airlines (NYSE: LUV) posted a third-quarter surprise profit that was accompanied by record revenues earlier today. However, shares are trading down around 7% given management’s more cautious fourth-quarter revenue outlook, demonstrating a classic example of rhetoric guiding the tape. The airline guided unit revenue growth of around 1-3%, while the company is also increasing capacity by around 6%. This serves as a clear warning that the recent government shutdown and other operational complications are eroding Southwest’s pricing power.