FORT WORTH, Texas _ Southwest Airlines said its third quarter profit declined 33 percent as the carrier flew more passengers who paid lower average fares.
The Dallas-based carrier said net income was $388 million, down from $584 million in the third quarter of 2015. Revenues also dipped, down 3.4 percent to $5.13 billion.
"We benefited from low fuel prices and record third quarter traffic levels in a competitive fare environment," said Southwest chief executive Gary Kelly. Southwest paid $2.02 per gallon of jet fuel, down 8.2 percent in the third quarter.
Southwest said it carried 4 percent more passengers in the quarter, although the average fare declined 4.8 percent to $147.55.
The carrier's quarterly results included $24 million in expenses related to Southwest's technology outage in July where the airline canceled hundreds of flights and stranded thousands of passengers. The airline said the outage had cost the carrier $55 million in lost revenues.
Excluding one-time accounting items, Southwest said its net income was $582 million, or 93 cents, beating Wall Street analyst earnings estimates of 88 cents.
However, investors were unhappy to hear Southwest's forecast that unit revenues in the fourth quarter will likely decline 4-5 percent.
"Southwest is the only airline to report that it is seeing no sequential improvement in unit revenue performance," said Cowen and Company analyst Helane Becker in a morning investor research report.
Shares of Southwest declined almost 12 percent on Wednesday morning, trading around $37.01.
The carrier said it planned to slow its network growth in 2017 and expects to increase its capacity by less than 4 percent in 2017.
"We will continue to manage our growth prudently in light of the revenue environment and increasing fuel prices," Kelly said.
