Southwest Airlines announced Wednesday it is raising its shareholder dividend as well as increasing its current stock repurchase program by $500 million, all in an attempt to raise share value by restoring value to stockholders. The airline industry has been challenged over the last few years by the rising cost of jet fuel, but Southwest, already the largest domestic carrier, has managed to increas epassenger traffic through its acquisition of discount airline Air-Tran.
Southwest's dividend increase was its first since 2001, and raises the quarterly payout from 45 cents to 46 cents. The airline said the raise would cost it an extra $4.2 million per quarter beginning next quarter. The stock repurchase program had $175 million remaining from a previous buyback authorization, but was boosted to $675 million in the latest move. The carrier reported solid first-quarter income last month on successful hedging moves to offset rising fuel expenses, and revenue increased as well. Southwest shares rose nearly 2 percent on the news, though they faded a little later in the day.