We're standing by for Southwest's Q3 earnings call. 

CEO Gary Kelly - "The percent of new or developing markets are roughly at historical levels for us"

I think this is the first time I've heard Southwest talk about competitive capacity on an earnings call - they need some way to explain the poor PRASM performance.

"We expect cost increases... in labor rates" - understatement of the year from Gary Kelly.

The booking feature of Southwest's new reservation system will launch in December - good news and good be some revenue upside. 

Southwest treated $356 million in bonuses to employees as a one-time charge. Even if they are technically a one-time charge, they shouldn't be a special item. Wall Street deserves to see just how aggressive Southwest's labor cost increases have been. 

It appears that the technology outage cost Southwest about $46 million in net income for Q3. 

Q3 passenger revenue would have been a record without the outage. 

Southwest joins the big boys in talking about some close in bookings strength. 

We're in a "stable but soft yield environment" according to CFO Tammy Romo. 

Shift of Christmas on the calendar to a weekend hits December PRASM by 1.5 percentage points.

Woah - Southwest just predicted flat to positive PRASM in January '17 - if they can deliver on that, things could get really, really interesting for Southwest's share price in early 2017. 

So it looks like the labor contracts are immediately going to hit CASM to the tune of 3.5% (which excludes those initial bonuses that Southwest gave out this year). I've been sounding the alarm on Southwest's labor costs for a while now, and will continue to do it even at the risk of inviting more racist, angry comments from Southwest's pilots. 

$392 million in free cash flow is pretty solid as well.

Tammy Romo clarifying her commentary on PRASM for early 2017, wouldn't rule it out for January, but signals that based on strength of advance bookings might hit positive PRASM for swaths of Q1.

She also reiterated the 3.5% increase in CASM due to pilot labor costs, that is again, not at all trivial.

For October, overall PRASM decline of 5%, 1 percentage point of which is driven by Hurricane Matthew.

Gary Kelly - "I think if airlines see weakness, they'll act upon that. I don't think what we've announced today is weakness" 

I'm not quite sure I agree. The aggregate figures are still very, very good, but Allegiant, Frontier, and especially Spirit are looking at these cost figures right now and salivating at the possibility of being able to undercut Southwest in markets around the country.

The slowdown in growth also is a double edged sword - yes you cut down investment expenditures, but you also lose additional ASMs to spread fixed costs over. Southwest for a long time outgrew their labor cost increases and they probably could do it in the current fuel environment, but their hands are tied by Wall Street's PRASM focus. 

Kelly - "We have costs that are significantly below that of our competitors." - Southwest is firmly middle of the pack in today's airline industry, the highest besides the legacy carriers in fact. 

Kelly says that Southwest's competitive position is no worse than five years ago. 

1% of Southwest's fourth quarter CASM increase is accelerated depreciation on the 737 Classic  which hits the profit-loss statement but doesn't cost Southwest any cash. 

"The fare environment will absolutely impact the traffic and fares we see on our network."

Southwest talking a lot about GDP growth and capacity outpacing that. I think there's an interesting dynamic here where Southwest and the LCC/ULCCs depend on general economy demand, whereas American/Delta/United are more driven by corporate profits. I wonder if AA/DL/UA track internally against corporate profit growth along with GDP growth. 

Aaaand, here's Wall Street signaling to Southwest that capacity growth will not stand....

My overall take on Southwest's earnings, another good quarter on the top line, but we're starting to see the cost pressures that will be enacted as a result of the labor issues. I actually think a bit more growth would be good for Southwest in this environment, but it can't do it given the handcuff from Wall Street.

The revenue stuff is interesting, and with the moderation of new capacity, if Southwest can get back to positive PRASM, it will certainly win some appreciation from Wall Street next year.