General Lee
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The Associated Press September 7, 2011, 12:27PM ET
Southwest hopes new planes will help profitability
By DAVID KOENIG
DALLAS
Southwest Airlines Co. expects to take delivery of its first Boeing 737-800 next March and get 25 of the new, larger planes next year to help boost its financial results.
Southwest chief financial officer Laura Wright said Wednesday that the company expects to eventually own 100 of the 737-800s.
Since they hold more passengers and burn less fuel per passenger than the 737s they will replace, Wright said they should help the airline both increase revenue and control costs.
The company also expects eventually to retire smaller, less-economical Boeing 717 jets that it obtained when it bought AirTran Airways in May, but that will take several years, Wright said.
Wright made the comments at an investor conference in New York shortly after Southwest reported its August traffic numbers. The company said traffic on Southwest and AirTran rose a combined 3.9 percent compared with a year ago.
A key revenue measure -- passenger revenue per mile -- grew even faster, about 6 percent. That's a closely watched number in the airline industry, and reports from Southwest and US Airways suggested healthy travel demand and higher prices than a year ago.
Southwest set several quarterly records for revenue in April through June. But higher costs -- especially for fuel -- caused it to miss Wall Street profit targets. The company is looking to the new planes and growth in key markets including Atlanta and Dallas to improve results.
It's also putting the brakes on growth in 2012. Wright said Southwest still expects its passenger-carrying capacity next year to be the same as, or even slightly below, 2011 levels. If other airlines also hold the line on capacity, the resulting limit on the supply of seats could push up fares.
In the current quarter, which ends Sept. 30, Southwest might get a break on fuel after oil prices fell this summer. In July, Southwest estimated it would pay $3.30 per gallon for jet fuel in the third quarter; on Wednesday, Wright put the price between $3.20 and $3.30 per gallon.
Wright also said Southwest has spent $144 million buying back shares in recent weeks. The company announced Aug. 5 that it would buy back up to $500 million of its own shares, a tactic companies use to appease shareholders because it can make existing shares more valuable.
Southwest authorized a similar $500 million program in 2008 but dropped it after spending just $54 million to save money as fuel prices rose and the economy soured.
Wright said Southwest has $4.1 billion in unrestricted cash and investments, "and certainly our goal is to maintain a comfortable level of core cash and liquidity as we venture into the uncertainties of today's economic environment."
Sounds like SWA has enough cash to pay the Airtran guys the same as the Southwest guys? If the ISL offer isn't right, one option would be to take it all the way to arbitration, and then wait it out. As the 717s leave, 737s would come in, and your seniority could be a lot better for the rest of your careers. It's up to you, but I think SWA intends to keep Airtran, especially after reading this article. Think marathon, not a sprint. Good luck FANTASTIC PEOPLE!
Bye Bye---General Lee
Southwest hopes new planes will help profitability
By DAVID KOENIG
DALLAS
Southwest Airlines Co. expects to take delivery of its first Boeing 737-800 next March and get 25 of the new, larger planes next year to help boost its financial results.
Southwest chief financial officer Laura Wright said Wednesday that the company expects to eventually own 100 of the 737-800s.
Since they hold more passengers and burn less fuel per passenger than the 737s they will replace, Wright said they should help the airline both increase revenue and control costs.
The company also expects eventually to retire smaller, less-economical Boeing 717 jets that it obtained when it bought AirTran Airways in May, but that will take several years, Wright said.
Wright made the comments at an investor conference in New York shortly after Southwest reported its August traffic numbers. The company said traffic on Southwest and AirTran rose a combined 3.9 percent compared with a year ago.
A key revenue measure -- passenger revenue per mile -- grew even faster, about 6 percent. That's a closely watched number in the airline industry, and reports from Southwest and US Airways suggested healthy travel demand and higher prices than a year ago.
Southwest set several quarterly records for revenue in April through June. But higher costs -- especially for fuel -- caused it to miss Wall Street profit targets. The company is looking to the new planes and growth in key markets including Atlanta and Dallas to improve results.
It's also putting the brakes on growth in 2012. Wright said Southwest still expects its passenger-carrying capacity next year to be the same as, or even slightly below, 2011 levels. If other airlines also hold the line on capacity, the resulting limit on the supply of seats could push up fares.
In the current quarter, which ends Sept. 30, Southwest might get a break on fuel after oil prices fell this summer. In July, Southwest estimated it would pay $3.30 per gallon for jet fuel in the third quarter; on Wednesday, Wright put the price between $3.20 and $3.30 per gallon.
Wright also said Southwest has spent $144 million buying back shares in recent weeks. The company announced Aug. 5 that it would buy back up to $500 million of its own shares, a tactic companies use to appease shareholders because it can make existing shares more valuable.
Southwest authorized a similar $500 million program in 2008 but dropped it after spending just $54 million to save money as fuel prices rose and the economy soured.
Wright said Southwest has $4.1 billion in unrestricted cash and investments, "and certainly our goal is to maintain a comfortable level of core cash and liquidity as we venture into the uncertainties of today's economic environment."
Sounds like SWA has enough cash to pay the Airtran guys the same as the Southwest guys? If the ISL offer isn't right, one option would be to take it all the way to arbitration, and then wait it out. As the 717s leave, 737s would come in, and your seniority could be a lot better for the rest of your careers. It's up to you, but I think SWA intends to keep Airtran, especially after reading this article. Think marathon, not a sprint. Good luck FANTASTIC PEOPLE!
Bye Bye---General Lee
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The Airtran pilots certainly can take your "advice" and take it to arbitration. Good luck with that. See you in ATL soon. 
