Southwest Airlines Posts Profit Despite Rising Fuel Costs
Southwest Airlines Posts Profit Despite Rising Fuel
Costs
Southwest Airlines released its first quarter results Thursday, posting a penny-a-share profit despite skyrocketing fuel prices. The airline reported earnings for the three months ended March 31st as $5 million. Excluding certain one-time charges, the airline matched analysts' expectations. The Dallas-based airline was the only one of the five largest carriers in the U.S. which analysts expected to post a profit for the quarter. Southwest also said it expects its $1.4 billion acquisition of AirTran Airways to close on May 2nd.
Southwest's fuel cost for the quarter was more than $1billion, a 26 percent increase over 2010's first quarter, and passed labor during the period as the airline's top drag on revenue. The carrier's revenue, meanwhile, climbed 18 percent to $3.1 billion. Southwest has done an outstanding job of coping with higher fuel costs with a delicate balance of fare increases and promotions to draw in passengers. Earlier in the week, in fact, Southwest followed the lead of most other major U'S airlines by raising the fares for most U.S flights by $10.
The company is expecting, meanwhile, for its revenue per seat mile to jump again in the second quarter after rising more than 9 percent in the first quarter. Southwest officials say that the increased revenue will be needed to offset a continued rising of fuel prices. Earlier this month, Southwest grounded 79 of its planes, about one-seventh of its overall fleet, and canceled nearly 700 flights after one of its Boeing 737s had a hole ripped in its roof during flight. Five other planes were subsequently found to have cracks caused by metal fatigue and were repaired.
Southwest Airlines released its first quarter results Thursday, posting a penny-a-share profit despite skyrocketing fuel prices. The airline reported earnings for the three months ended March 31st as $5 million. Excluding certain one-time charges, the airline matched analysts' expectations. The Dallas-based airline was the only one of the five largest carriers in the U.S. which analysts expected to post a profit for the quarter. Southwest also said it expects its $1.4 billion acquisition of AirTran Airways to close on May 2nd.
Southwest's fuel cost for the quarter was more than $1billion, a 26 percent increase over 2010's first quarter, and passed labor during the period as the airline's top drag on revenue. The carrier's revenue, meanwhile, climbed 18 percent to $3.1 billion. Southwest has done an outstanding job of coping with higher fuel costs with a delicate balance of fare increases and promotions to draw in passengers. Earlier in the week, in fact, Southwest followed the lead of most other major U'S airlines by raising the fares for most U.S flights by $10.
The company is expecting, meanwhile, for its revenue per seat mile to jump again in the second quarter after rising more than 9 percent in the first quarter. Southwest officials say that the increased revenue will be needed to offset a continued rising of fuel prices. Earlier this month, Southwest grounded 79 of its planes, about one-seventh of its overall fleet, and canceled nearly 700 flights after one of its Boeing 737s had a hole ripped in its roof during flight. Five other planes were subsequently found to have cracks caused by metal fatigue and were repaired.
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