Southwest Airlines' stock is getting pummelled

Southwest Airlines is getting pummelled 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%.

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

NOW WATCH: 5 of the most successful ‘Shark Tank’ stories of all time

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at