Southwest Airlines Second Quarter Profit Rises 34%

Southwest Airlines said Thursday that its second-quarter profit rose
34% from the year-ago period, as increased demand and disciplined seat-capacity
management helped to drive ticket prices higher.


Southwest

“Although business demand has
not fully recovered, it has strengthened, and consumer travel demand is
robust,” said Chairman and Chief Executive Gary Kelly. “We
experienced record traffic levels during the quarter, despite flat year-over-year
capacity, demonstrating a continuing and significant market-share shift to
Southwest.”

For the recent period, the Dallas-based carrier said it earned $112 million, or 15 cents a share, up from $91 million, or 12 cents a share, in the year-earlier period. Excluding items, earnings in the latest quarter would have been 29 cents a share. On average, analysts polled by FactSet Research were looking for a profit of 26 cents a share.

Total operating revenue rose to $3.17 billion from $2.62
billion, versus analysts’ mean estimate of $3.15 billion.

In the past year, Southwest stock has risen 56.6% as
investors shook off the financial crisis from late 2008.

Revenue per available seat mile, or unit revenue, outpaced
unit costs during the quarter as average ticket prices climbed rapidly. Unit
costs rose 12.8%, or 6.4% after excluding fuel, while unit passenger revenue
jumped 21.5%.

Average passenger fare rose 19.3% to $131.82.

Looking ahead, Southwest said it would continue to
restrain capacity to grow its revenue and profits.

“Given the current economic outlook and trends, we continue
to approach route expansion through optimizing our flight schedule rather than
fleet growth,” said Kelly, in a statement. “We remain committed to
reaching our financial targets before we return to any significant level of
fleet growth.”