Southwest just issued a chilling warning to the airline industry

Boeing 737 MAX Southwest Airlines
Boeing 737 MAX Southwest Airlines

(Southwest)

Southwest Airlines is getting pummeled Thursday morning even though the company reported a 35% increase in quarterly profits.

Shares of the low-cost airline plummeted 9% in morning trading.

Southwest reported $820 million in profits for the second quarter of 2016 — up from $608 million during the same period last year.

However, investors are more concerned with the airline's warning that it is expecting unit revenue to fall as much as 4% next quarter due to lower ticket prices and greater levels of competition.

Even though America's fourth largest airline has saved 10% on fuel costs last quarter while returning an operating margin in excess of 18%, the airline also reported that ticket prices have fallen 3.7%.

Earlier this week, United Airlines also reported experiencing pressure from lower tickets prices and greater competition during the second quarter of 2016.

This news comes less than a day after computer failures forced Southwest to cancel 920 flights on Wednesday and Thursday.

Southwest Airlines stock 7/21
Southwest Airlines stock 7/21

(Yahoo Finance)

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