Southwest Airlines experienced a 4% drop in shares after reducing its second-quarter revenue forecast due to changing booking patterns. The airline now expects a 4% to 4.5% decrease in revenue per available seat mile, a significant change from its initial estimate of a 1.5% to 3.5% decline. Unit expenses, excluding fuel, are also expected to rise by up to 7.5%, with capacity increasing by as much as 9%. Despite these challenges, Southwest still anticipates record quarterly operating revenue. Competition from rivals like Delta and United, which have capitalized on the return of international travel, has added pressure on Southwest. Additionally, activist investor Elliott Management is pushing for leadership changes within the company. Southwest remains confident in its ability to adapt to evolving customer needs, considering revenue-generating strategies like seating assignments or premium seating.