Shares of the Dallas-based airline were down about 4% in morning trade.
Some carriers have struggled to accurately predict demand trends especially on domestic routes, exposing them to the risk of overcapacity on some major routes, hurting their pricing power despite strong overall demand.
Southwest's revised forecast contrasts with those of other major carriers which remain optimistic about summer travel driven by strong international demand.
Southwest, which operates an all-Boeing (BA.N) fleet, has been reeling from the planemaker's ongoing safety crisis that has delayed deliveries of its new jets on order, forcing the airline to moderate its growth plans.
Earlier this year, Southwest was forced to remove the smaller MAX 7 aircraft from its 2024 fleet plans due to certification issues.
The smallest MAX jet was expected to provide Southwest flexibility to adjust capacity to suit demand as passenger traffic trends stay dynamic.
On Wednesday, the company said changing travel patterns meant it was unable to sell the amount of seats it planned.
Last month, American Airlines (AAL.O) also lowered its second-quarter unit revenue forecast as it tried to grow its market share in smaller markets, while walking away from corporate travel customers.
"Activists will eat up the revenue problem," Jefferies analyst Sheila Kahyaoglu said in a note referring to Elliott and the company's forecast revision.
The carrier now expects current quarter RASM to be down between 4% to 4.5%, compared with its previous estimate of a fall of 1.5% to 3.5%.
Despite lowered expectations, the company continues to expect a "record operating revenue" in its second quarter.
