Southwest Airlines reports earnings of 9 cents a share
Superstorm Sandy and higher costs dampened Southwest Airlines’ fourth-quarter profitability, but McCarran International Airport’s busiest commercial carrier still beat analysts’ earning expectations.
Southwest has an average of 191 daily flights to and from Las Vegas and maintains a 44.3 percent market share of flights.
Southwest’s net income fell to $78 million, 9 cents a share after special items, on revenue of $4.17 billion, compared with $152 million, 20 cents a share, on revenue of $4.1 billion in the same quarter a year ago.
Earnings beat expectations of a survey of investors by Thomson Reuters First Call, which projected 8 cents a share.
The airline said its lower quarterly profit was the result of higher costs for fuel, employee salaries and maintenance parts. Revenue was spurred by a 5.4 percent average fare increase over the previous year.
Operating expenses were up 3 percent, including costs tied to wages and salaries, which went up 4.5 percent. Maintenance materials and repair expenses soared by 13 percent, while fuel costs were up 0.7 percent.
Southwest also slogged through a period of airport closures, flight cancellations and system delays resulting from Sandy, which directly affected 24 states Oct. 28-30.
For the year, Southwest had net income of $421 million compared to $178 million in 2011. It was the airline’s 40th straight year of profitability.
“Without a doubt, this is a remarkable feat and a record unmatched in the airline industry,” Southwest Chairman and CEO Gary Kelly said in a release accompanying the airline’s earnings announcement.
“These solid earnings were achieved despite significant efforts and costs related to critical strategic initiatives. I expect these initiatives to produce substantial returns over the next several years,” he said.
Kelly said the airline, which acquired AirTran Holdings in 2011, has strong bookings for the current quarter and that revenue is projected to be higher than in the first quarter of 2012.
The airline also announced recently that it would be adding flights to and from New Orleans next week in anticipation of increased demand from the Super Bowl, which will be played Feb. 3.
Southwest also developed a new revenue source earlier this week when the airline announced a new optional fee for customers.
Starting Tuesday, Southwest began offering the ability to cut to the front of the boarding line for $40.
The fee is paid at the gate starting 45 minutes before boarding. Payment can be made to the gate agent by credit card.
It’s the third early boarding revenue-generator offered by Southwest.
The airline also offers its Business Select ticket prices, which include priority boarding, and Early Bird service, which enables passengers to move ahead of others more than 24 hours before flight time.
The new $40 fee puts passengers in with the Business Select tier for boarding, before the Early Bird buyers.