July 26, 2018 / 6:06 PM / a month ago

Southwest says demand recovered after April accident, shares rise

CHICAGO (Reuters) - Southwest Airlines Co (LUV.N) has overcome the business effects of a fatal mid-air engine explosion in April, Chief Executive Gary Kelly said on a conference call on Thursday after reporting solid second-quarter earnings that sent shares higher.

A family check in for their Southwest flight in Philadelphia International Airport in Philadelphia, Pennsylvania U.S. April 17, 2018. REUTERS/Mark Makela

Shares climbed 5.5 percent to $55.19 after Dallas-based Southwest posted a rise in second-quarter earnings per share to $1.26 from $1.23 on an adjusted basis, topping the Wall Street consensus projection of $1.22, according to Thomson Reuters I/B/E/S.

An engine on one of Southwest’s Boeing 737 jets blew apart during a flight in April and killed one of 149 people aboard, triggering a drop in bookings and forcing the company to discount fares to attract flyers.

Second-quarter passenger revenues declined by $100 million as a result of the accident, but the carrier said it was encouraged by a solid rebound in demand and pointed to positive momentum going forward, despite higher fuel costs that have hit U.S. airlines’ profitability.

Southwest said it was trimming plans to boost seat capacity by about one point due in part to more costly fuel, which it sees rising to $2.25 a gallon in the third quarter from $2.07 a gallon a year ago.

The largest carrier of U.S. domestic passengers said it is still focused on flying to Hawaii in 2019 and plans to start selling tickets later this year.

Reporting by Tracy Rucinski; Editing by Nick Zieminski

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