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Southwest posts 2Q profit of $161 million

Associated Press//August 4, 2011

Southwest posts 2Q profit of $161 million

By Associated Press

//August 4, 2011

DALLAS — Southwest Airlines Co. boosted its second-quarter profit with higher fares and more traffic from the addition of AirTran, but fuel costs soared a stunning 64 percent higher than a year ago.

After excluding special items such as gains from fuel-hedging contracts, Southwest’s profit was smaller than analysts expected.

The company says that because of the pessimistic outlook for the economy and fuel prices, it won’t increase capacity next year.

Southwest said Thursday that it earned $161 million in the April-through-June quarter. That’s up from $112 million a year ago.

The average fare went up 8.4 percent. Southwest and other airlines raised prices several times this year to offset higher fuel costs. Traffic increased 28 percent, which helped drive up revenue nearly 31 percent. Much of that was due to the May acquisition of AirTran Airways.

Excluding special items such as gains on fuel-hedging contracts, Southwest would have earned 15 cents per share. Analysts, who usually exclude items, expected 21 cents per share, according to a survey by FactSet.

The company set records for full planes, fares and revenue.

But with high fuel prices, “our year-over-year revenue growth could not keep pace,” said Chairman and CEO Gary C. Kelly.

Kelly said that with a “pessimistic near-term outlook for fuel prices and the U.S. economy,” the company reduced its winter schedule and expects passenger-carrying capacity next year to be flat or less than this year.


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