July 27, 2021

Southwest Logs $152 Million Profit, Topping Estimates

Service cuts, fare increases and the retirement of less fuel-efficient planes have aided airline profits even as high oil costs and economic uncertainty have threatened demand for flying.

Southwest, which is based in Dallas, forecast strong passenger revenue for the current quarter.

“The industry has set itself up to continue to grow in 2012, but the wild card here is the general economy,” said Matthew Jacob, an analyst with ITG Investment Research. “We’re not seeing any indication that demand for air travel is slowing at this point.”

Southwest, the traditional low-fare leader among major American airlines, acquired AirTran last year and gained entry to East Coast cities, including Atlanta. Southwest-branded flights will start in Atlanta next month.

Southwest is also upgrading its planes. It reached a deal late last year to buy 208 Boeing 737s, including 150 of the soon-to-come 737 MAX planes that will have new engines. Southwest said this week that it would upgrade cabin interiors and add six seats to more than 350 older planes.

The AirTran purchase “is going to be a major game changer for them,” said Helane Becker, an analyst with Dahlman Rose Company. Still, she said Southwest’s biggest challenges were managing merger expenses and higher energy costs while keeping worker productivity high.

Fourth-quarter net income at Southwest was $152 million, or 20 cents a share, compared with $131 million, or 18 cents a share, in the period a year earlier.

Excluding items tied to fuel contracts and acquisition costs, net income was $66 million, or 9 cents a share, Southwest said. Analysts expected 8 cents, Thomson Reuters said.

Revenue rose 32 percent, to $4.1 billion. Operating expenses were up about 37 percent, with fuel and oil costs up 59 percent from the period a year earlier.

Southwest’s shares rose 3 percent, to $9.30.

Article source: http://feeds.nytimes.com/click.phdo?i=0b5bfa3a69fc25c5f8b2fd41bfe79a65

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