Dec 4, 2007 9:19 am US/Central
Southwest Cuts Growth Plans For Second Time
DALLAS (AP) ―
Southwest Airlines Co. said Tuesday it would slow its planned growth in 2008, the second time this year that the low-cost carrier has reined in expansion as it struggles with high fuel costs.
The airline said it would grow 4 percent to 5 percent next year, compared with earlier expectations of 6 percent in 2008. The company will retire planes faster than it adds new ones in a bid to boost profits.
"We are concerned about growing evidence of slowing economic growth that would inevitably affect passenger demand, coupled with a surge in energy prices," Chief Executive Gary C. Kelly said in a statement.
Southwest made the announcement as it reported that November traffic grew 2.6 percent, measured by miles flown by paying passengers. That growth, however, failed to keep up with a 6.4 percent increase in capacity.
As a result, average occupancy on Southwest flights slipped to 69.3 percent from 71.8 percent in November 2006.
The Dallas-based airline plans to add five to 10 new planes next year, down from its previous plans for 19 Boeing 737s.
Southwest first cut its growth plans in June and Kelly said then that Southwest might revisit the issue this month.
Southwest has options to buy fuel at below-market rates, which gives it an advantage over its rivals. Still, rising fuel costs are making it harder for the airline to hit its financial goals.
The announcement comes a day after rival Continental Airlines Inc. cut its growth expectations for mainline operations to 2 percent to 3 percent.
Southwest shares fell 23 cents to $13.50 at the open of trading Tuesday.
Southwest Airlines Co. said Tuesday it would slow its planned growth in 2008, the second time this year that the low-cost carrier has reined in expansion as it struggles with high fuel costs.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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