Guest M. McRae Posted July 21, 2003 Share Posted July 21, 2003 Monday July 21, 9:08 am ET By Meredith Grossman Dubner CHICAGO (Reuters) - Low-cost carrier Southwest Airlines Inc. (NYSE:LUV - News) said on Monday that quarterly net profit more than doubled, including funds from a U.S. government aid package, and it predicted another profit in the third quarter. Even without the government's help, the No. 6 U.S. airline said second-quarter profit increased 22.6 percent. Southwest is the only major U.S. airline that has consistently posted a profit since the Sept. 11 attacks sent the industry into an unprecedented downturn. Southwest's net income amounted to $246 million, or 30 cents per share. A year earlier, it posted a profit of $102 million, or 13 cents a share. Excluding $271 million from the government, Southwest's profit rose to $103 million, or 13 cents a share, compared with $84 million, or 10 cents a share, before items a year earlier. Analysts on average were expecting Southwest to earn 11 cents a share, according to Reuters Research, a unit of Reuters Group Plc. A federal aid package designed to help the airline industry weather the travel slump related to the Iraq war has helped some of the major carriers eke out net profits for the second quarter. Without that government assistance, however, most posted huge losses. Dallas-based Southwest said it expects third-quarter earnings to exceed its third-quarter 2002 profit of $75 million. It also expects to increase capacity next year after exercising options for more planes. "Thus far in third quarter 2003, unit revenues are exceeding year-ago levels. The outlook for the economy remains uncertain, however, and we remain concerned about travel demand post-Labor Day," Chief Executive James Parker said in a statement. ENVIED BY RIVALS Southwest said it recently exercised remaining options for the delivery of nine Boeing 737-700s next year. It also exercised six 2005 options for accelerated delivery in 2004, and accelerated the firm delivery of two 2005 aircraft to 2004. The changes to its delivery schedule bring its current 2004 firm orders to 42 aircraft. After subtracting planned retirements of Boeing 737-200 planes, the result is an annual capacity increase of 6 percent to 7 percent, the company said. As low-cost carriers like Southwest and JetBlue Airways Corp. (NasdaqNM:JBLU - News) are expanding their fleets, others are delaying delivery of planes. Continental Airlines Inc. (NYSE:CAL - News) last week deferred the delivery of 36 aircraft. Southwest's low-cost structure is the envy of its major rivals, including AMR Corp.'s (NYSE:AMR - News) American Airlines and bankrupt UAL Corp.'s (OTC BB:UALAQ.OB - News) United Airlines, which are racing to trim expenses to stay competitive. United, as part of its reorganization, plans to launch a low-cost operation to compete with discount carriers that have gobbled up market share. Delta Air Lines (NYSE:DAL - News) in April introduced a low-cost unit called Song. Air traffic has started to pick up again now that fears related to the Iraq war and SARS virus outbreak have dissipated. But demand still rests at very depressed levels. Southwest said its traffic was up 4.6 percent in the quarter on a capacity increase of 4.2 percent. The airline said it ended the second quarter with $2.2 billion in cash on hand in addition to an unsecured revolving credit line of $575 million. Shares of Southwest rose about 20 percent in the second quarter, while the American Stock Exchange's airline index (AMEX:^XAL - News) jumped 85 percent during the period. Shares of low-cost carriers have climbed since the beginning of the year, as investors shy away from larger airlines with high expenses and anticipate more growth among discounters. http://biz.yahoo.com/rb/030721/airlines_southwest_earns_2.html Link to comment Share on other sites More sharing options...
Guest M. McRae Posted July 21, 2003 Share Posted July 21, 2003 I see that they are also reporting an increase in their load factor...... over 2002 Operating Results Total operating revenues for second quarter 2003 increased 2.9 percent to $1.52 billion, compared to $1.47 billion for second quarter 2002. Excluding the special item in 2002, operating revenues increased 5.4 percent from $1.44 billion in second quarter 2002. Revenue passenger miles (RPMs) increased 4.6 percent in second quarter 2003, compared to a 4.2 percent increase in available seat miles (ASMs), resulting in a load factor of 70.1 percent versus the second quarter 2002 load factor of 69.9 percent. The passenger revenue yield per RPM decreased 1.8 percent, to 11.67 cents, from 11.88 cents in second quarter 2002. Excluding the special item in 2002, the passenger revenue yield per RPM increased 0.8 percent, to 11.67 cents, from 11.58 cents in second quarter 2002. Operating revenue per ASM (RASM) decreased 1.3 percent, to 8.47 cents, from 8.58 cents in second quarter 2002. Excluding the special item in 2002, RASM increased 1.2 percent, to 8.47 cents, from 8.37 cents in second quarter 2002. Total second quarter 2003 operating expenses were $1.38 billion, an increase of 7.1 percent, compared to $1.28 billion for the same year ago period. Excluding special items, operating expenses were $1.33 billion in second quarter 2003, an increase of 4.4 percent. Operating expenses per ASM (CASM) for second quarter 2003 increased 2.7 percent, to 7.68 cents, from 7.48 cents in second quarter 2002, due to higher profitsharing expense on the government grant. Excluding special items, CASM increased slightly to 7.46 cents in second quarter 2003, compared to 7.44 cents in second quarter 2002. For second quarter 2003, the Company benefited from $36 million of hedging gains recorded in "Fuel and oil," resulting in jet fuel costs per gallon of 67.4 cents, which was flat with second quarter 2002. Link to comment Share on other sites More sharing options...
Maverick Posted July 21, 2003 Share Posted July 21, 2003 The difference I suppose is they do not have competitor(s) willing to sacrifice the busy spring and summer travel season for market share above all else. Link to comment Share on other sites More sharing options...
Guest M. McRae Posted July 21, 2003 Share Posted July 21, 2003 I suspect that is not the case. The market in the US is very competitive. eg. http://www.aa.com/apps/netSAAver/NetSAAverHome.jhtml;jsessionid=DBSLBG0SBLRWREAJJNHSNAMQBFFUWLTT?anchorEvent=false Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.