Southwest Airlines reported a lower-than-expected quarterly profit, hit by higher operating expenses and a decline in average fares.
The airline’s shares were down 4.5 percent at $54.40 in premarket trading on Thursday.
The No.4 U.S. airline by passenger traffic said its unit revenue, a metric that compares ticket sales with flight capacity, fell 2.8 percent in the quarter ended March 31.
However, the Dallas-based carrier said it expects unit revenue in the current quarter to rise 1-2 percent.
Earlier this month, bigger rival Delta Air Lines also forecast its passenger unit revenue to rise 1-3 percent in the second quarter, citing improving demand and average fares.
U.S. carriers have struggled to mark positive increases in unit revenue as cheaper fares and tougher competition have pummeled the industry.
The budget airline’s operating expenses increased 8.8 percent to $4.23 billion and its average passenger fare declined 2.6 percent in the first quarter.
The company said its net income fell to $351 million, or 57 cents per share, in the quarter, from $513 million, or 79 cents per share, a year earlier.
Excluding items, the company earned 61 cents per share, compared with estimates of 63 cents, according to Thomson Reuters I/B/E/S.
Operating revenue rose 1.2 percent to $4.88 billion.