Jan 23, 2008 7:32 am US/Central
Southwest Airlines' 4Q Profit Rises
Airlines Warn Fuel Costs To Rise Sharply This Quarter
DALLAS (AP) ―
Dallas-based Southwest Airlines Co. reported a larger profit for the fourth quarter, but the airline said Wednesday that fuel costs in the current quarter will rise substantially.
Southwest said net income rose to $111 million, or 15 cents per share, compared to a year-earlier profit of $57 million, or 7 cents per share. Revenue rose to $2.49 billion from $2.28 billion a year earlier. Excluding special items, the company reported a profit of 12 cents per share.
Analysts surveyed by Thomson Financial expected profit of 10 cents per share on revenue of $2.48 billion. Those estimates typically exclude one-time items.
For the current quarter Southwest estimated fuel costs of about $2 a gallon, up from $1.72 per gallon in the fourth quarter. Fuel costs are among airlines' largest expenses.
Chief Executive Gary Kelly said the quarter and full-year profit "fell short of our earnings goals" due to high costs and operational challenges regarding bad weather, traffic and security. Southwest has also been taming its rapid growth in a bid to fly fuller planes, though its capacity increases outpaced traffic growth during the fourth quarter. That led to emptier, less profitable flights.
Southwest has also begun a multi-million dollar initiative to renovate its gate areas and marketing and said Wednesday it will begin installing equipment to test on-board Internet service.
The airline has been transitioning its boarding method from its longtime "cattle call" to assigned seating and has launched a special business flyer program with higher ticket prices for in-flight extras.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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