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StumbleSouthwest quarterly earnings soar
‘Bags Fly Free’ policy helped traffic, official says
Sun file photo
Southwest Airlines planes sit at McCarran International Airport.
Published Thursday, July 29, 2010 | 8:12 a.m.
Updated Thursday, July 29, 2010 | 10:32 a.m.
Southwest Airlines 2Q 2010 report
| 2Q 2010 | 2Q 2009 | % change | 1Q 2010 | |
|---|---|---|---|---|
| Revenue | $3.17 billion | $2.62 billion | 21.1% | $2.63 billion |
| Earnings | $112 million | $91 million | 23.1% | $11 million |
| Earnings per share | 15 cents | 12 cents | 25% | 1 cent |
Southwest Airlines (NYSE: LUV)
- By passenger volume, Southwest is the No. 1 carrier at McCarran International Airport.
- Southwest has announced that its seasonal schedule change in November would remove 12 daily flights from its Las Vegas schedule, including the only nonstop flights to and from MacArthur Airport at Islip, N.Y. on Long Island and to Norfolk, Va.
- Southwest began service to Panama City Beach, Fla., including connecting flights from Las Vegas, in May.
- Southwest announced in May that next year it would begin serving Charleston and Greenburg-Spartanburg, S.C.
- Southwest paid a half-cent dividend to shareholders on July 7.
- Southwest had a 52-week high stock price of $13.97 on April 21.
- July 28 stock price: $12.01.
- Southwest earnings beat analysts’ projections by 2 cents a share.
Dallas-based Southwest Airlines, the market leader at McCarran International Airport, rode an all-time-high quarter for revenue to become the fifth of six major air carriers to be profitable in 2010’s second quarter.
Southwest, which averages 217 daily flights to and from Las Vegas and has a 40 percent market share at McCarran, reported earnings today of $112 million, 15 cents a share, on revenue of $3.17 billion. That compares with earnings of $91 million, 12 cents a share, on revenue of $2.62 billion in the same quarter a year earlier.
Analysts had projected Southwest would have pre-special expense earnings of 27 cents a share for the quarter, which ended March 31. Before special expenses, Southwest had earnings of 29 cents for the quarter.
Southwest Chairman, President and CEO Gary Kelly said in a release announcing earnings that revenue trends could continue in the third quarter with record loads anticipated in July. He attributed the airline’s revenue success to the company’s policy of not charging for bags and excellent customer service offered by employees.
“We experienced record traffic levels during the quarter, despite flat year-over-year capacity, demonstrating a continuing and significant market share shift to Southwest, in part due to our unique and successful ‘Bags Fly Free’ policy,” Kelly said. “Further, we led the industry with our year-over-year domestic passenger revenue and corresponding unit revenue performance.
“We see no signs that the momentum will stall in second half 2010,” he added. “Based on traffic and revenue trends to date, we expect strong year-over-year unit revenue growth in third quarter 2010.”
Southwest’s profitable quarter was in line with other airlines with Delta, United, Continental and US Airways having higher revenue and earnings for the quarter that ended June 30. Only American Airlines failed to make a quarterly profit among the major carriers.
Southwest’s successes aren’t translating into greater opportunities in Las Vegas, however, as the airline’s recently announced new schedule removes 12 round trips from McCarran’s schedule beginning in November. While the schedule adjustment is routine for Southwest and a seasonal change, it removes more than 1,600 incoming seats a day for the city.
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Further proof that SWA doesn't see growth in LV in the foreseeable future. Having the #1 LV carrier drop some flights is not a good trend for the city, particularly one that is a low fare carrier.
green - every year they do this, its a winter thing.
Great to see SW is making money.
It's not complicated, their secret is customer service and no charges for check-in baggages. The other greedy airlines should take note and I wish they lose more money for fleecing the flying customers with their unnecessary charges.
"unclegig" I agree;
I travel to Vegas about every 2 months to visit my Father. Used to always fly AA and USAir; now its Southwest everytime. I'm fed up with the baggage fee, especially when USAir once forced me to check a duffle I have been carrying on for years. Plus you can still get drinks for $5 vs the $7 (except when they send me those free drink coupons). Wise up AA and USAir!
More good news on the economy!!! We all have to thank Harry Reid and Shelley Berkely for bringing these jobs to Las Vegas. They both have done so much for the local people here. Lets keep them working for Nevada!
SW is fine for short hops (1-2 hours) but I have a hard time flying them for longer journeys. As a frequent traveler, I find that their 737 fleet is a tighter configuration than other airlines and being >6ft it is pretty uncomfortable unless you're in the exit row. Plus, I don't enjoy the C gates at McCarran (too claustrophobic compared to the D gates) and I long ago grew tired of the grating comedy bits the SW crew does on flights (if you fly enough you hear the same jokes and routines on multiple flights).
The economy was losing 500,000 jobs per month in 2008. Now it's at least stabilized.
U.S. GDP grew in each of the last 3 quarters, jobs are always lagging the numbers recovery in each recession -- a cool site; Balkingpoints ; incredible satellite view of earth
Second unclegig. My coworkers, family, friends, and I all reward Southwest's steadfast commitment to a customer-friendly business model with our steadfast loyalty. Everyone tried to tell the other airlines they were alienating customers with ruthless over-booking and needless fees, and they just snubbed their noses. I'm rooting for Southwest to become THE resoundingly preferred airline to/from everywhere they offer service.
stingraynm, if you think Southwest doesn't also over-book flights you are sorely mistaken. I've seen it happen many times.
I live in SW's home market (DFW), but can't even fly direct to Las Vegas (or 99% of the country) due to the Wright Amendment. Otherwise, I'd ditch USAir in a heartbeat for my quarterly Vegas excursions.
jim3535
Do you like the song about marry a flight attendent and you will fly for free.
This is great news, airline in general do not make a profit.
Keep up the good work SW.