SWA Q2 Profit

[zman]

Southwest Airlines said Thursday it earned a record $465 million in the second quarter, or $485 million excluding special items.

Southwest chairman and CEO Gary Kelly said it was the company?s fifth straight quarter to set a record.

?The successful execution of our strategic initiatives continues to contribute significantly to these record profits,? he said in the company?s release.

 

[waveflyer]

Transcript2Q 2014 Record Profit
by Gary Kelly, Tammy Romo

Gary: Good morning, everybody. Thanks for joining the Employee Newsline. This is Gary Kelly, and I’m joined this morning by Tammy Romo. Today is July the 24th, and we just released our second quarter financial results.

Tammy and I have some very exciting news to share with you all, and, as well, we wanted to give you the full recap of our results here. I also recorded a video that is live on SWALife, so be sure to check that out as well.

I am absolutely thrilled to report that for the first time in nearly 14 years, we have met our requirement of 15 percent pre-tax Return on Invested Capital. In fact, for the past 12 months, we earned 17 percent ROIC. So, congratulations to everyone! Of course, this has been a long time coming, and it took a lot of hard work by all of our Southwest and AirTran Warriors to pull it off. Make no mistake about it—it is truly a remarkable achievement, and it calls for a celebration!

With that, I’m pleased to announce that Southwest and AirTran Employees will be receiving a $200-dollar ROIC Recognition Cash Award to celebrate this accomplishment. This award will be paid as a special payment through your regular direct deposit channel on August the 8th. So, again, this is a $200 ROIC Recognition Cash Award, and that will be in your regular direct deposit on August the 8th.

I’ve said this many times, and you all know this—operating an airline is the ultimate team sport, and this was a total Team effort. You should all be very proud. I am certainly very, very proud of you. We are all one Team at Southwest, and when the Company does well, so do you.

Thank you again for your hard work! I hope you enjoy the $200 bucks. And I just want you to know how much I appreciate everything you do each and every day to keep pushing Southwest forward. We have a very bright future ahead, and, of course, that’s because of you!

And with that, let me turn it over to Tammy to cover the details of our second quarter results.

Tammy: Thanks, Gary. And good morning, everyone! Let me start off by congratulating everyone on a fantastic quarter. Achieving a 17.1 percent pre-tax Return on Invested Capital over the last 12 months is a major accomplishment. You should all be very proud. Although we still have a few months to go before we can claim victory for full year 2014, we are very well positioned to meet or exceed our 15 percent target with the exceptional results produced during the first half of the year.

For second quarter, this morning, we reported a record profit of $485 million, which resulted in a record quarterly ProfitSharing expense of $127 million, so congratulations again to everyone on the superb performance. Our stock price reached an all-time high yesterday, closing at $28.87.

Our second quarter earnings benefitted significantly from our strategic initiatives. Operating revenues of $5 billion were an all-time quarterly high, with passenger revenues growing 8.5 percent year-over-year. Both our second quarter load factor and passenger revenue yield were records. Our network development and optimization efforts continue to go very well, and we are looking forward to the repeal of the Wright Amendment on October 13 and more Reagan National flights being added later this year.

We also had a solid second quarter cost performance. Our operating costs continue to benefit from our strategic initiatives and were comparable to second quarter last year. Thankfully, fuel costs have remained relatively stable, despite the unrest in the Middle East. Second quarter jet fuel costs per gallon were down 1.3 percent to $3.02, which included a five-cent hedging gain. If you take out special items and fuel and oil expense, our unit costs were up 3.4 percent. A large portion of this increase was driven by record ProfitSharing. If you also take out ProfitSharing, our second quarter unit costs were up 1.7 percent year-over-year.

 

[Clyde Frog]

You can take your $200 and shove it up your lying ass.

 

[redflyer65]

You mean $200 wasn't enough lube to get you thru the back door?

 

[BILL LUMBERG]

Congrats on the profits but wtf is GK thinking giving a whopping 200 bucks because you are swell?

That's a big slap in the face right?

(Outsider looking in)

 

[Wesb737fo]

I remember Mesa giving out $8 buck turkey coupons for Christmas one year. Now THAT was a slap in the face. Oh.... And we got purple windbreakers one year too......ooh yeah.

 

[CaptWidgeon]

how does this freakin' tool sleep at night? (mr kelly)
i have absolutely zero respect for him. i've more respect for crandall.
how the hell did kelleher pick this guy?!?!

 

[Nindiri]

Why all the hostility over the $200? Am I missing something, was there a contractual expectation of more?

 

[SWA Bubba]

Congrats on the profits but wtf is GK thinking giving a whopping 200 bucks because you are swell?

That's a big slap in the face right?

(Outsider looking in)

You're right, Bill, in that it's not all that much to us as pilots.... But it might be a lot to a ramper or skycap. Every employee gets the same $200.

Bubba

 

[waveflyer]

You can take your $200 and shove it up your lying ass.

If I slap you, can I have your $200??

And c'mon Bill- $200 is a LOT of money
Do you realize how much guzzling PCL has to do to make $200

 

[Dan Roman]

You're right, Bill, in that it's not all that much to us as pilots.... But it might be a lot to a ramper or skycap. Every employee gets the same $200.

Bubba

Good post Bubba, many of us forget how much $200 dollars can mean to a lot of people and many of us also forget how fortunate we are at the upper end of the pay scales in this business. Personally I think it's a very good thing when all the employees I work with (and depend on) are getting a bonus.

 

[Phlintstone]

What does GK get? I'm thinking a million or two...minimum. I'll take everyones $200 if they do not want it .

Phred

 

[Capn Butthead]

It's actually 4 million plus that I believe GK takes home for a bonus. Sure it's great for the employees to get the cash...but GK didn't have to deal with the delays running hours late on no sleep, dealing with irate pax, or sitting on a cold ramp waiting 3 hours for a short staffed ramp. GK could care less. He's an accountant. He doesn't care about the employees or the passengers. He got his 15%...which he said we will grow when we hit it...but he's already said we won't grow in 2015 so that also makes him a POS. Can't trust the man as far as you can throw him.

 

[canyonblue]

GK could care less. He's an accountant. He doesn't care about the employees or the passengers. He got his 15%...which he said we will grow when we hit it...but he's already said we won't grow in 2015 so that also makes him a POS.

All the airlines are making record profits because they aren't growing or adding capacity. We, as pilots, rely on growth to fuel upgrades and seniority movement. Which one do you think Kelly cares about?

 

[waveflyer]

It's actually 4 million plus that I believe GK takes home for a bonus. Sure it's great for the employees to get the cash...but GK didn't have to deal with the delays running hours late on no sleep, dealing with irate pax, or sitting on a cold ramp waiting 3 hours for a short staffed ramp. GK could care less. He's an accountant. He doesn't care about the employees or the passengers. He got his 15%...which he said we will grow when we hit it...but he's already said we won't grow in 2015 so that also makes him a POS. Can't trust the man as far as you can throw him.

Gary didn't have to deal with the delays and up scheduled layovers, but he did have to deal with the likes of you who've been as impatient as a 4 year old, and have the business acumen of a pilot. ( )

All 5 initiatives were scheduled to be completed in 2015- and they're working. Excuses for late contracts are over, excuses for flat growth are over, and the situation is quickly being set to take on new international opportunities-
And everyone got a couple hundred bucks in their pocket-
(All of which I'm giving to line employees over the next few weeks in gift cards snacks or whatever crosses my mind- as an exercise in gratitude)

Bubba said it very well- there are a whole lot of line employees that $200 means a bit of breathing room this month and I'm noticing an uptick and sense of accomplishment this week out online.

These are all good things.

 

[PCL_128]

You're right, Bill, in that it's not all that much to us as pilots.... But it might be a lot to a ramper or skycap. Every employee gets the same $200.

And that's really the problem. Everyone shouldn't get the same amount.

 

[DCitrus9]

And that's really the problem. Everyone shouldn't get the same amount.

That is rich. When the signing bonus for our last contract was divided up a certain union thug fought vigorously to screw the Captains, and give everyone the same amount. The difference between the fo and ca bonus check was quite small.

 

[PCL_128]

That is rich. When the signing bonus for our last contract was divided up a certain union thug fought vigorously to screw the Captains, and give everyone the same amount. The difference between the fo and ca bonus check was quite small.

You must be talking about a different union thug, because I favored a formula that would put more weight on longevity and give the captains more of the money.

 

[waveflyer]

And that's really the problem. Everyone shouldn't get the same amount.

Egalitarian

Learn it

This isn't contractual - it's a gift

 

[PCL_128]

Egalitarian

Learn it

So I guess that means you're going to give up your salary so that you can make the same as the reservations agents?

Besides, it's bull$hit. Gary isn't getting $200, and neither are any of the other execs. They're getting millions. But they want you to think that you're equal to a bag tosser. Wake up. The kool aid has piss in it.

 

[twepilot]

You must be talking about a different union thug, because I favored a formula that would put more weight on longevity and give the captains more of the money.

Total effing bs.

 

[waveflyer]

So I guess that means you're going to give up your salary so that you can make the same as the reservations agents?

Besides, it's bull$hit. Gary isn't getting $200, and neither are any of the other execs. They're getting millions. But they want you to think that you're equal to a bag tosser. Wake up. The kool aid has piss in it.

You can't stand the success of this can you?

Maybe all your negative BS has as little merit as I've been saying if you can't figure a way to spin this low?? Is that what you're worried about?

Look, pcl-

What you're saying doesn't make sense-
It's just a $200 attaboy- that's it. Not a contract. I still make a lot more than a res agent. And GK makes a lot more than me.

Here is what I do know-
Credibility is important in negotiations- and you'll learn this if you get involved in a lot of them with your business.

For example- I once replaced a supplier who had a really good product bc we just couldn't win with them. We would come well researched, show the numbers of what their product added to ours, what ours sold for and the value their operation gave us. We gave them a bonus one time for their 5th shipment showing up ahead of schedule. (More significant than this one as to total value) It was ABOVE AND BEYOND the contract, but a token measure to show that we appreciated it and to let them know that good performance will be rewarded-

Couldn't win though- he led with complaining emotion and always found fault with the end contract-
He had your mentality -

We were by no means an enormous part of his business, but probably represented 3-4%. So we worked with another supplier on their QA program and eventually replaced him outright with people who had more credibility. (To link it up, that was the Brisbane trip)

If we complain about EVERYTHING, and never show any satisfaction with things like say... Free money with no strings, then we will wake up like many airlines and find that we ourselves have taken away all motivation for them to work fairly with us.

Say thank you. It isn't hard. The $200 isn't meant to be a substitute for a fair and reasonable contract that recognizes what we've given. It's a token-
And it spends.

I'm glad for that and it's not another One Luv coin that we can't spend-

Gratitude is a key of life PCL- you'll be richer learning that one too

 

[redflyer65]

It's just a $200 attaboy- that's it.

Bingo. Nothing more, nothing less. How many attaboy's did AirTran throw out? More like pink slips maybe?

 

[PCL_128]

Three years without a new contract, he pisses on you, and you praise him. Unbelievable. You'll get the "flattish" contract you deserve.

 

[waveflyer]

What world do you live in where $200 is pissing on you?

Btw moron- look at the 5 initiatives, plus the fact that GK was painted into a corner by wall street's 15% "request" (make no mistake- that came from Wall Street), plus looking at most legacy contracts aren't scheduled to leapfrog us in type until 2015, and any idiot could tell you that most contracts were going to be open longer than normal -
I've said it for years now, we'll be lucky to get a contract before 2015 -
And low and behold....
:-/

Dude- you aren't too dumb to read the tea leaves and understand the intersection of all the business pressures--, which is why I always criticize you in particular for having an alpa agenda. It's the only line that makes sense when someone is as smart as you -
Just keep straining credibility to poison the well a bit.

 

[PCL_128]

You really are delusional if you think ALPA has anything to do with any of my comments at this point. We're likely within 30-60 days of ALPA disappearing, and since I'm just months away from hanging up the airline wings for good, I'll never have anything to do with ALPA again. ALPA has nothing to do with this. You're just so obsessed with your ALPA hatred that you can't help but see ALPA behind every turn.

No, this is about self respect and knowing your value. Yes, $200 given to you when he's giving the rampers the same $200 is pissing on you. That is, unless he's decided to voluntarily forgo his bonus this year and accept the same $200 instead. Yeah, didn't think so.

 

[waveflyer]

You keep talking about his bonus-
We'll still be getting our profit sharing which is substantially more than any Ramper

Look- I actually don't have a hatred for ALPA- at all- I hate agendas. And you've had one since day one but don't cop to it-
Since you won't explain, I'm just trying trying to figure it out .

The other option besides agenda is to just accept that you're bitter, dumb, and have body issues at your young age- and all that tends to lash out weirdly at times
There's probably more evidence to support that, but for some reason I do want to give you the benefit of the doubt

 

[PCL_128]

You're a pretty pathetic excuse for an armchair psychologist. Especially seeing as how you recently wrote a bunch of posts giving people odd dating advice and begging them to come have a drink with you on your overnights. :laugh:

Lay off the psychobabble, wave. This is about business, not your strange obsession with ALPA or with me.

 

[-9Capt]

Bingo. Nothing more, nothing less. How many attaboy's did AirTran throw out? More like pink slips maybe?

Shows how much you know.

Years ago AirTran used to give a $10K bonus to two capts and a $5K bonus to 2 FO's and a dispatcher if we met our quarterly fuel goal.

 

[General Lee]

Shows how much you know.

Years ago AirTran used to give a $10K bonus to two capts and a $5K bonus to 2 FO's and a dispatcher if we met our quarterly fuel goal.

Never listen to Red, the guy is a clueless idiot who probably thinks you guys were treated well in the transition and should be happy to now be Corndogs. Again, he is clueless.


Bye Bye---General Lee