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Southwest Airlines will stop overbooking flights after United dragging

Southwest Airlines reported lower first-quarter profits on Thursday due to lower fares and higher fuel costs.
Southwest Airlines reported lower first-quarter profits on Thursday due to lower fares and higher fuel costs. Star-Telegram

Southwest Airlines said it will stop overbooking flights sometime in the next quarter, partly in response to the United Airlines dragging incident two weeks ago.

Chief Executive Officer Gary Kelly said the Dallas-based airline hasn’t been overbooking much recently because more customers have been showing up for their flights, eliminating no-shows.

“We have been challenging ourselves to make the travel experience better for our customers and just make the service better for our employees to deliver and that is one of the pain points we’d like to eliminate,” Kelly said on a conference call with investors to discuss the airline’s first-quarter earnings.

Although Kelly said the carrier has considered ending overbooking for some time, the viral video of a passenger being dragged off a United plane that was overbooked led Southwest to decide to end the practice sooner rather than later.

Southwest’s decision came as United Airlines announced Thursday it would increase payouts to almost $10,000 for passengers who voluntarily give up their seats on an overbooked flight. Delta Air Lines had similarly increased its payouts last week.

“Every customer deserves to be treated with the highest levels of service and the deepest sense of dignity and respect,” United’s chief executive Oscar Munoz said in a statement. “We are taking concrete, meaningful action to make things right and ensure nothing like this ever happens again.”

United also said it reached an “amicable resolution” with David Dao, the passenger who was forcibly removed from the flight. Terms of the agreement were not disclosed.

On Thursday, Southwest said its first-quarter profits dropped by a third as passengers paid lower fares and fuel costs rose.

The Dallas-based carrier said net income declined 32 percent to $351 million, although revenues increased 1.2 percent to $4.88 billion. Southwest carried more than 35.5 million passengers in the quarter, up 2.7 percent, but the average passenger fare dropped 2.6 percent to $149.78.

Southwest said it paid $1.96 per gallon of jet fuel, up 10 percent from the first quarter of 2016. The company expects to pay $1.95-$2 per gallon in the second quarter.

The airline’s profits were also hurt by increased costs. It paid 12.6 percent more on salaries and wages after signing two new labor contracts this fall with its pilots and flight attendants unions.

Excluding one-time accounting items, Southwest reported income of 61 cents per share, missing Wall Street estimates. Shares of Southwest [ticker: LUV] declined $1.19, or 2 percent, to close at $55.75 on Thursday.

Andrea Ahles: 817-390-7631, @Sky_Talk

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