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Southwest updates Q3 guidance, cuts unit costs and capacity outlooks

Southwest Airlines Co. disclosed Wednesday that it expects third-quarter operating revenue per available seat mile (RASM) to rise 3% to 5% from a year ago, citing continued “solid demand and strong passenger yield trends.” That compares with 6.8% RASM growth in the sequential second quarter and a 1.2% increase in last year’s third quarter. The stock was still inactive in premarket trading. The airline also cuts its growth outlook for third-quarter costs per available seat mile (CASM) to 8% to 10% from 9% to 11% and trimmed its guidance for available seat miles (ASM) to decrease about 3% from a decrease of 2% to 3%. The company said it canceled about 600 flights in September as a result of Hurricane Dorian, but didn’t expect that to have a material impact on results. Southwest said its scheduled still reflect removal of all flights of Boeing Co.’s 737 Max flights through Jan. 5, 2020, following the grounding of the plane in March. The stock has rallied 19.9% year to date, while the Dow Jones Transportation Average has gained 16.7% and the Dow Jones Industrial Average has advanced 16.2%.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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