Y2K problems, fuel costs hurt Southwest’s quarterly earnings

Tuesday, Jan. 18, 2000 | 11:34 a.m.

SUN STAFF AND WIRE REPORTS

Southwest Airlines Co., the largest carrier at McCarran International Airport in Las Vegas with 149 daily flights here, today reported lower profits in the last quarter of 1999 because of higher fuel costs and Y2K problems.

Also reporting lower profits today were Delta Air Lines Inc. and Continental Airlines Inc.

Dallas-based Southwest said net income fell to $93.8 million or 18 cents a share from $100.4 million or 19 cents a year earlier. Revenue rose 15 percent to $1.2 billion.

Despite the decline, Southwest matched analyst estimates for the quarter.

Fuel costs soared 71 percent to $161.6 million, while scheduled aircraft maintenance costs rose 19 percent to $92.9 million.

Passenger traffic jumped 19 percent in the fourth quarter while Southwest's load factor, or the percentage of seats filled, rose 3.5 percentage points from the year-earlier period.

"With the exception of a late-December decline in traffic due to Year 2000 concerns, we enjoyed positive revenue momentum through fourth quarter 1999," said Southwest Chairman and Chief Executive Herb Kelleher.

Delta, the third-largest U.S. airline, said its fiscal second quarter profit fell 9.8 percent to $175 million or $1.24 a share.

Continental, the No. 5 carrier, said profit from operations fell to $33 million or 47 cents a share.

Southwest and Continental said they were hit by late-December declines in demand as consumers delayed trips on Y2K concerns or because they were required to work during the date rollover.

Fuel costs, in the meantime, more than doubled to 76.9 cents a gallon at the end of 1999. Fuel costs generally are airlines' second-biggest expense.