Following a fatal accident involving engine failure and an emergency landing in Philadelphia last week, Southwest Airlines Co. (LUV, Financial) reported its first-quarter earnings before the opening bell on Thursday.
The Dallas-based airline posted adjusted earnings per share of 75 cents, topping Thomson Reuters’ estimates of 74 cents. The company said its earnings received an 18% boost as a result of strong demand and changes in the U.S. corporate tax code.
Revenue grew 2% from the prior-year quarter to $4.94 billion, which was a record for the company in terms of first-quarter performance.
Despite the earnings beat, shares slumped nearly 4% in pre-market trading as Southwest said the engine explosion, which killed one passenger and injured several others on a flight traveling from New York to Dallas, will weigh on second-quarter bookings. The company said it expects revenue per available seat mile, which tracks average prices, to decline between 1% and 3% in the second quarter. It has already seen slower sales since the April 17 accident.
For the most recent quarter, it recorded revenue per available seat mile of 13.23 cents, which was in line with last year.
In a statement, Chairman and CEO Gary Kelly offered condolences to the family of Jennifer Riordan, who died after being partially sucked out of the opening made by debris.
“It remains a somber time for the Southwest Family following the Flight 1380 accident, and our thoughts and prayers continue to be with the Riordan family, and all of our customers on the flight,” he said. “I want to extend my immense gratitude for the compassion and support shown by our employees, customers and airline peers."
Kelly also vowed to work with the National Transportation Safety Board as it continues to investigate and emphasized the company’s commitment to safety. Since the incident, the airline has canceled dozens of flights in order to accommodate engine inspections, which the company expects be completed by the end of May.
Reuters reported the company has also sent $5,000 checks to other passengers on the flight.
According to CNBC, the incident marks Southwest’s first passenger fatality in its 51-year history and was the first death on a U.S. commercial passenger airline since 2009.
With a market cap of $30.47 billion, Southwest was trading around $52.31 late Thursday morning, down 2.92%. GuruFocus estimates the stock has fallen approximately 21% year to date.
Disclosure: No positions.
