Southwest Airlines Co. LUV reported better-than-expected earnings but lower-than-expected revenues in the third quarter of 2017. The carrier’s earnings per share (excluding 4 cents from non-recurring items) of 88 cents beat the Zacks Consensus Estimate of 87 cents. The bottom line however, declined 5.4% on a year-over-year basis.Operating revenues of $5,271million lagged the Zacks Consensus Estimate of $5,296.6 million. The top line however, improved 2.6% year over year. Passenger revenues accounted for the bulk (90%) of the same. Operating StatisticsAirline traffic, measured in revenue passenger miles, nudged up 2.5% year over year to 33.13 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 3.1% to 39.05 billion. Load factor (percentage of seats filled by passengers) came in at 84.8%, down 50 basis points on a year over year basis, as capacity expansion was more than traffic growth. Passenger revenue per available seat mile (PRASM: a key measure of unit revenue) slid 1.4% to 12.15 cents. In the reported quarter, revenue per available seat mile (RASM) was 13.50 cents, down 0.5% year over year.Operating Expenses & IncomeIn the third quarter, operating income came in at $834 million compared with $695 million in the prior-year quarter. Excluding special items, the operating income stood at $871 million, down 10.4%. Total adjusted operating expenses (excluding profit sharing, fuel and oil expense plus special items) increased 6.5% year over year. Fuel price per gallon (inclusive of fuel tax: economic) declined 4% year over year to $2. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, oil and special items — rose 3.9% year over year to 8.58 cents.LiquidityThe company had cash and cash equivalents of $1,460 million at the end of third quarter compared with $1,680 million at the end of 2016. As of Sep 30, 2017, the company had a long-term debt (less current maturities) of $2,763 million compared with $2,821 million at the end of 2016. While the carrier generated a cash flow of $358million in third-quarter 2017, it returned $375million to its shareholders through a combination of dividends and share repurchases.Southwest Airlines Company Price, Consensus and EPS Surprise Southwest Airlines Company Price, Consensus and EPS Surprise | Southwest Airlines Company QuoteGuidanceThe company expects RASM growth of up to 1.5% year over year in the fourth quarter of 2017 on the back of a rebound in passenger booking trends in Houston and Floridaand a robust air travel demand. Unit costs (excluding fuel and oil expenses, special items and profit-sharing expenses) in the fourth quarter are expected to be flat up to 1.5%. This is inclusive of a shift in advertising expenses from third to fourth quarter as well as incremental costs associated with technology investments.The company still expects 2018 available seat mile to be less than 5.7%, while anticipating an increase of 3-4% in the first half of 2018.Zacks Rank & Stocks to ConsiderSouthwest Airlines carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the airline space are Deutsche Lufthansa AG DLAKY, International Consolidated Airlines Group SA ICAGY and Bristow Group Inc BRS. While Deutsche Lufthansa and International Consolidated Airlines sport a Zacks Rank #1 (Strong Buy), Bristow Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Shares of Deutsche Lufthansa, International Consolidated Airlines and Bristow Group have gained more than 46%, 14% and 22% respectively, over the last three months.Looking for Stocks with Skyrocketing Upside?Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.See the pot trades we're targeting>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southwest Airlines Company (LUV): Free Stock Analysis Report Bristow Group Inc (BRS): Free Stock Analysis Report Deutsche Lufthansa AG (DLAKY): Free Stock Analysis Report International Consolidated Airlines Group SA (ICAGY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research