Gary C. Kelly

Southwest reports lower 2Q profit, weak revenue outlook

Shares of Southwest Airlines fell 5 percent Thursday after the company offered a weak forecast for a key revenue figure in the third quarter.

Southwest gave more evidence that the effort by U.S. airlines to push average fares higher may be faltering. Bolstered by high profits, the airlines could soon be adding seats faster than demand is growing, leading to more price-slashing.

That is good news for travelers. But it is troubling for airline shareholders, who are worried that revenue could fall while fuel and labor costs are rising.

Southwest said so-called unit revenue, the amount it gets for every seat flown one mile, was 1.5 percent higher in the second quarter...