Monday the markets took shares of AMR, parent of American Airlines to the woodshed, after the airline issued revised downward guidance for the third quarter. Actually the market took shares of most airline stocks along for the unpleasant ride.

Today, Southwest said that it now expects CASM to rise between 4% and 5% for the third quarter. This is up from a previous estimate of 2%.

So why are shares of Southwest only down 1.5% as of now — instead of the 14% beating AMR shares took on Monday?

Because in the case of Southwest, the airline says that most of the additional cost is a result of the airline’s recent “buy out” deal that attracted more than 600 employees. The airline said it will be taking a $25 million pretax charge as part of the buy out deal.

“Southwest guidance suggests a third-quarter profit below both our own estimate and that of consensus,” said JP Morgan analyst Jamie Baker in a note this morning.

He lowered his third-quarter earnings estimate to $0.20, down from $0.23.

Ticker: (NYSE:LUV)

Technorati Tags: American Airlines, Southwest Airlines