09:44 AM EDT, 07/25/2024 (MT Newswires) -- Southwest Airlines' ( LUV ) second-quarter earnings fell year over year but came in ahead of Wall Street's expectations while the air carrier said it is taking steps to address "near-term revenue challenges."

Revenue per available seat mile, or unit revenue, is anticipated to be flat to down 2% in the third quarter year over year. The guidance assumes a revenue management headwind of two points from bookings already in place. Available seat miles, which refers to the space available to carry passengers in a given period, is set to be up roughly 2%.

For the three months through June, the company posted adjusted earnings of $0.58 a share versus $1.19 the year before, topping the Capital IQ-polled consensus of $0.51. Total operating revenue rose 4.5% to $7.35 billion, ahead of the Street's view for $7.34 billion.

Revenue per available seat mile fell 3.8% from the prior-year quarter mainly due to industry-wide domestic capacity growth that was higher than demand. In addition, the company faced revenue management challenges as the airline sold an excess number of seats for the peak summer travel period too early in the booking curve. Last month, the air carrier projected unit revenue to be down 4% to 4.5% for the second quarter.

"Our second-quarter performance was impacted by both external and internal factors and fell short of what we believe we are capable of delivering," Chief Executive Bob Jordan said in a statement. "We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement longer-term transformational initiatives that are designed to drive meaningful top and bottom-line growth."

In a separate statement on Thursday, Southwest ( LUV ) announced that it's moving forward with plans to end its open seating model and offer premium seating options on all its flights to meet evolving consumer preferences and increase revenue opportunities.

Operating expenses rose to $6.96 billion from $6.24 billion last year, according to the company. Operating expenses per available seat mile, excluding fuel and oil expense, special items and profit sharing, rose 6% from last year, mainly driven by higher salaries and maintenance expenses.

The airline is still planning for about 20 deliveries of Boeing's (BA) 737 Max 8 in 2024 and aims to retire 35 aircraft this year.

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