Southwest Earns A Record $453 Million In 1st Quarter
Southwest is spending about a buck less on every gallon of fuel, and that's helping the airline post record profits quarter after quarter.
The airline says April bookings have been strong, but it expects a key revenue figure to decline in the second quarter.
Dallas-based Southwest Airlines Co. said Thursday that first-quarter net income tripled from a year ago, to a record $453 million. The results were slightly better than Wall Street expected.
The biggest reason was fuel. Southwest's fuel bill dropped 33 percent, thanks to the sharp slide in oil prices since last summer. The airline paid $2 per gallon, down from $3.08 a year ago, and the savings added up to $437 million — more than the entire increase in profit.
Southwest is also stuffing more passengers on planes by holding growth below the increase in travel demand. Southwest increased passenger-carrying capacity by 6 percent, but people flew 7 percent more miles than they did a year earlier, so the average flight was 80.1 percent full, a record for the usually weak first quarter.
The average one-way fare nudged higher by less than 1 percent, to $158.01.
Dallas-based Southwest, the nation's fourth-biggest airline, said it earned 66 cents per share and the first quarter was the eighth straight quarter of record profit.
The results edged the average estimate of 18 analysts surveyed by FactSet, who expected 65 cents per share. A year ago, net income was $152 million.
Revenue rose 6 percent to $4.41 billion, matching the FactSet forecast.
Fuel spending dropped to $877 million from $1.31 billion a year earlier. Labor topped fuel as Southwest's biggest expense — spending on wages and benefits rose 11 percent to $1.42 billion.
CEO Gary Kelly said that April bookings have been strong. But, he said, the company faced a difficult job in matching strong results during last year's second quarter.