Info from SWA's 10K Listing 2Q'03

[chase]

Interesting tidbits for the SWA wannabee or poolie

1. Number of Employees at period-end
2Q03 2Q'02
32,902 33,149 (0.7)%

Size of fleet at period-end
2Q03 2Q'02
379 366 3.6%

Employees per plane
2Q03 2Q'02
86.81 90.57

Fewer folks, means more profit, more efficiency


2. " average passenger fare increased 1.0 percent to
$85.87 despite the prior year passenger revenue adjustment, primarily due to moderate fare increases taken by the Company."

3. Next quarter outlook:

"Thus far, traffic and load factors for July, and bookings for the
remainder of July and August are strong due to high demand for vacation travel. Thus far in third quarter 2003, unit revenues are exceeding year ago levels. The outlook for the economy remains uncertain, however, and the Company remains
concerned about travel post-Labor Day. "

4. Other areas of income for the company:

"Consolidated freight revenues increased by $3 million, or 13.6 percent, primarily due to increases in freight and cargo revenues from both moderate rate increases taken by the Company and an increase in the number of shipments."

"For third quarter 2003, the Company may experience a year-over-year decrease in consolidated freight revenues compared to third quarter 2002 primarily due to lower mail revenues as the U.S. Postal Service may shift some mail shipments to other freight and commercial carriers. Other revenues decreased slightly in second quarter 2003 as a 36.5 percent decline in charter revenue
was mostly offset by a 21.5 percent increase in commissions earned from programs the Company sponsors with certain business partners, such as the Company sponsored First USA Visa card."

5. Future Operating expenses:

"Based on recent trends, the Company currently expects third quarter 2003 unit costs to exceed third quarter 2002 primarily due to higher wages and health benefit costs. Salaries, wages, and benefits expense per ASM increased 12.3 percent.
Approximately 65 percent of the increase was due to a $41 million increase in profitsharing, which related to the $271 million government grant. The remaining 35 percent of the increase was primarily due to higher wages from higher average wage rates."

Fuel costs: Shows more efficient aircraft are helping saving money, winglets will do it even better.

"Fuel and oil expense per ASM decreased 1.8 percent primarily due to a decrease in the Company"s fuel burn rate per ASM flown. Although the Company flew 4.2 percent more available seat miles than second quarter 2002, fuel consumption was up only 2.2 percent. The average fuel cost per gallon in second quarter 2003 was 67.4 cents, the same as second quarter 2002, including the effects of hedging activities. For third quarter 2003, the Company has fuel hedges in place for 87 percent of its expected fuel consumption with a combination of derivative instruments that effectively cap prices under $24per barrel. "

Travel commissions & the cost savings with soutwest.com

"Agency commissions per ASM decreased 22.2 percent primarily due to a decline in commissionable revenues. The percentage of commissionable revenues decreased from approximately 20 percent in second quarter 2002 to approximately 16 percent in second quarter 2003. Approximately 53 percent of revenues in
second quarter 2003 were derived through the Company"s web site at www.southwest.com versus 46 percent of revenues in second quarter 2002. Based on recent trends, the Company currently expects commissionable revenues to remain in the 16 percent range in third quarter 2003."

Aircraft leasing, number of aircraft owned & leased:

"Aircraft rentals per ASM decreased 3.7 percent compared to second quarter 2002 primarily due to the increase in ASMs relative to the number of leased aircraft. Although ASMs increased 4.2 percent, the number of leased aircraft
declined by one, as a result of a retirement in second quarter 2003. All of the aircraft acquired in 2002 and 2003 are owned by the Company. Approximately 23.5 percent of the Company"s aircraft fleet was under operating lease at June 30, 2003, compared to 24.6 percent at June 30, 2002....This, along with
the retirement of one leased aircraft, has increased the Company"s percentage of aircraft owned or on capital lease to 76.5 percent at June 30, 2003 from 75.4 percent at June 30, 2002."


Landing fees, costs going down:

"The decrease in landing fees expense per ASM was primarily due to an increase in the average stage length per trip flown, or miles flown per aircraft trip. The Company flew 4.2 percent more ASMs, but the number of trips flown remained relatively flat compared to 2002."

Aviatinn insurance:

"Other operating expenses per ASM decreased 8.7 percent primarily due to a decrease in aviation insurance costs.....The Emergency Wartime Supplemental Appropriations Act (see Note 9 to the unaudited condensed consolidated financial statements) extends the government"s mandate to provide war-risk insurance until August 31, 2004 and permits such coverage to be
extended until December 31, 2004. As a result of more coverage from government insurance programs and a more stable aviation insurance market, the Company was able to negotiate lower 2003 aviation insurance premiums than 2002. However,
aviation insurance remains substantially higher than before September 11, 2001. The Company currently expects a year-over-year decrease in other operating expenses per ASM for third quarter 2003, primarily from lower aviation insurance costs."


6. Fleet info:


Southwest has contractual obligations and commitments primarily with regards to future purchases of aircraft, payment of debt, and lease arrangements. Following the receipt of three new 737-700 aircraft from Boeing in the second quarter 2003 and two in first quarter 2003, the Company has 12 remaining 737-700 aircraft deliveries for 2003. Also, during second quarter 2003, the Company exercised its remaining options for 2004, exercised six 2005 options for accelerated delivery in 2004, and accelerated the firm delivery of two 2005 aircraft to 2004. This change brings the Company"s total firm orders to 42 for 2004. The following table details the Company"s current firm orders,
options, and purchase rights through 2012.


Current Schedule
Firm Options*

2003** 17 -
2004 42 -
2005 22 12
2006 22 16
2007 25 29
2008 6 45
2009-2012 - 177
Total 134 279

*Includes purchase rights
**Includes five aircraft delivered in first half 2003

The following table details information on the 379 aircraft in the Company"s fleet as of June 30, 2003:

Average Number Number Number
737 Type Seats Age (Yrs) of Aircraft Owned Leased

-200 122 20.8 26 24 2
-300 137 12.1 194 110 84
-500 122 12.2 25 16 9
-700 137 3.1 134 133 1

TOTALS 9.5 379 283

____________

Lots of rumors out there but for those making plans for interviews, hiring numbers, stay with the conservative info that is out there, interviews 1Q'04, hiring numbers in the 300's next year. Hopefully more & sooner but until I get better intel I'll live with those predictions. cheers & God Bless,

 

[AJWick]

WOW! As always, chase you have done well. Thanks for the intel.

Lots of good stuff....will take some time to soak in.

However, I still predict 4th qtr of 2003 is when classes will begin.

aj

 

[skirt]

Interesting tidbits for the SWA wannabee or poolie

1. Number of Employees at period-end
2Q03 2Q'02
32,902 33,149 (0.7)%

Size of fleet at period-end
2Q03 2Q'02
379 366 3.6%

Employees per plane
2Q03 2Q'02
86.81 90.57

,

Chase, you do a great job with numbers. I am great to see people looking at 10K's and picking out those things that are important. SWA does a great job with productivity, and so does JB. Head count is one of the big issues, and looking at the 10K is a great way to monitor the situation.

For example, a month ago (before the 2Q 10K's) I looked up these numbers:

SWA 88 fulltime equiv. employees per plane
JB 103
UAL 130 (after cutting and cutting), it was 160 per plane in 2001.

Numbers much over 100 seem to really make a big difference. Looking at other airlines, it seems that 85-110 is a good range. I know that JB and SWA monitor that figure closely. I guessing JB's numbers will likely come down as they grow, though will likely remain more than SWA, by design. The UAL numbers will come down a bit, but not much, because more airplanes will be parked as the numbers drop, keeping the ratio higher.

It's easy to check these numbers at your airline to see where your airline fits in.

Skirt

 

[Daedalus]

The employee per aircraft metric is a very good one to measure efficiency. But it is helpful to consider that it is not always a direct correlation between airlines. IOW, if airline x has a emp/plane ratio of 100/1 and flies it aircraft an average of 10 hours/day, and you compare that with airline y which has the same emp/plane ratio, but flies its aircraft 13 hours/day, then airline y would be more efficient by virtue of its greater aircraft utilization and the associated extra bodies needed to fly those additional hours each day.

Also, I know this is a nitpick, but since we're talking financial stuff and all, the "10K" report deals with the annual reporting of financial numbers, and the "10Q" deals with the quarterly reporting of the same information. Okay, now everybody can call me the 10K nazi. I'm sorry I just can't help myself!

 

[skirt]

Daedalus,

I will gladly accept your nitpicking. Of course you are correct. I was just trying to point out how a pilot could look at the various publicly available documents to make some intelligent decisions on their own and not always rely on rumor mills and bboards. I was just talking SEC doc reading 101, but you can take it a step higher to SEC doc reading 102, if you want. Such discussion helps everyone.

You are totally correct that asset productivity is not just emp/airplane, but airplane utilization, and a few other items like stage length, turn time, load factors, etc.

Also the 10Q and 10k are useful to determine a/c rents, maintenance and debt/capitalization, all of which have been subjects of rumor mills on this board at one time or another.

There are factors that are not listed in SEC docs that also effect productivity and profit (employee moral and attitude), so it is not just a numbers game, but a firm grasp of the public numbers helps a pilot understand his/her own company and where it is headed.

Skirt