Shares of Southwest Airlines (NYSE:LUV) are leading the airline sector into the red on Thursday after the carrier showed a sizable decline in passenger revenue and increased costs that overshadowed better-than-expected first quarter results.

Southwest Airlines said Wednesday that it will reduce its capacity in the second half of the year, as more signs point to weaker domestic bookings this year.

Southwest Airlines shares fell in premarket trading Thursday, a day after the carrier withdrew full-year earnings projections and said it was reducing capacity amid "macroeconomic uncertainty."