Southwest Airlines reports record earnings again
LAS VEGAS REVIEW-JOURNAL
Southwest Airlines executives have no intention of sitting on their hands in the months ahead, even after obliterating earnings records a fifth straight quarter.
The company posted on Thursday best-ever profits a fifth time with a 7.9 percent increase in revenue and more than doubling quarterly earnings from a year ago.
The company reported net income of $465 million, 67 cents a share, before special items on revenue of $5 billion for the quarter that ended June 30. That compares with net income of $224 million, 31 cents a share, on revenue of $4.64 billion for the same quarter a year ago.
Results beat Wall Street analysts’ expectations by 6 cents a share.
Despite the gaudy numbers, Southwest President and CEO Gary Kelly told analysts in an earnings call that the airline’s challenge will be to prioritize opportunities in the months ahead, including determining what initiatives would best propel the company toward its goal of getting at least a 15 percent return on investment of capital.
Southwest already has a strategy for the short term — capitalizing on the repeal of the Wright Amendment, which Kelly said
Wright Amendment restrictions lifting
is 88 days away. The repeal will lift a restriction that will enable Southwest to offer nonstop flights between its Dallas Love Field headquarters and any city on its route map.
For Las Vegas, that means three daily nonstop round trips starting Oct. 13 and a fourth beginning Nov. 2.
Kelly also said Southwest would increase its emphasis on flights to and from Ronald Reagan Washington National Airport and bulk up flying to New York’s LaGuardia International Airport, which both have operational restrictions.
Once the Dallas, Washington and New York expansions are completed, Kelly said the company would examine the best opportunities available, adding that there are about 50 possible destinations to consider.
Southwest expanded its route map into the Caribbean during the quarter, flying to Aruba, Jamaica and the Bahamas.
Record load factors and passenger revenue yields contributed to the performance of the airline, the busiest air carrier operating at McCarran International Airport.
The company also benefited from lower-than-expected fuel costs and a positive fuel price hedging program.
The airline operates an average 212 flights a day between Las Vegas and 58 nonstop destinations, both the most by any carrier at the airport.
Shares of Southwest Airlines lost 19 cents, or 0.66 percent to close Thursday at $28.68 on the New York Stock Exchange. Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.