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Southwest Airlines posts loss, says growth 'suspended indefinitely'
02:22 PM CST on Thursday, January 22, 2009
By TERRY MAXON / The Dallas Morning News
tmaxon@dallasnews.com
Southwest Airlines Co. will cut its capacity 4 percent in 2009, and chairman and chief executive Gary Kelly said Southwest’s growth is “suspended indefinitely.”
"I definitely want Southwest Airlines to grow," Kelly told industry analysts and reporters on a conference call. "I believe we will be able to grow, but that is certainly a secondary objective in this kind of an economic environment.
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He discussed Southwest’s new strategy as the Dallas-based carrier announced it lost $56 million in the fourth quarter including special items, giving Southwest its first back-to-back quarterly losses in nearly 18 years.
However, Southwest said it earned $178 million for the full year, continuing its unbroken string of annual profits that began in 1973.
The 2008 results were boosted by $1.3 billion in gains from fuel hedging, sparing Southwest from the huge losses that other carriers have announced or are expected to report.
AMR Corp., parent of American Airlines Inc., said Wednesday it lost $340 million in the fourth quarter and $2.07 billion for the full year. UAL Corp., parent of United Airlines Inc., posted a net loss of $1.03 billion for the fourth quarter and $5.35 billion for the year.
"We are very proud to report another profitable year in one of the most difficult years in aviation's 100-year-plus history,” Mr. Kelly said in a prepared statement. In the conference call, he added: "I for one am very glad that 2008 is over.”
Mr. Kelly said Southwest has cut its 2010 delivery of new Boeing 737-700 jets to 10, down from 16 firm orders and six options that it had held. It ended the year with 537 airplanes, and expects to be flying 535 at the end of 2009, with lease returns and retirements to cancel out 13 new deliveries.
Through 2012, Southwest has eliminated firm orders for nine airplanes and options to buy another 32 aircraft. Through 2018, it still has firm orders, options and purchase rights for 220, but the deliveries and potential deliveries are being pushed back.
Mr. Kelly said he was pleased at Southwest’s increased revenues, up 9.7 percent to $2.73 billion in the fourth quarter. However, Southwest like other airlines was hurt by higher jet fuel prices, increasing its operating expenses 12.6 percent to $2.66 billion.
Despite an operating profit of about $70 million, special items – particularly the requirement to reflect the market price of hedging contracts – put the airline in the red for the fourth quarter.
02:22 PM CST on Thursday, January 22, 2009
By TERRY MAXON / The Dallas Morning News
tmaxon@dallasnews.com
Southwest Airlines Co. will cut its capacity 4 percent in 2009, and chairman and chief executive Gary Kelly said Southwest’s growth is “suspended indefinitely.”
"I definitely want Southwest Airlines to grow," Kelly told industry analysts and reporters on a conference call. "I believe we will be able to grow, but that is certainly a secondary objective in this kind of an economic environment.
Also Online
Airline Biz Blog: Updates from Southwest Airlines conference call
10/16/2008: Southwest Airlines posts first quarterly loss in 17 years on fuel charge
Company press release
$519M makeover planned at Dallas' Love Field
American Airlines parent loses more than $2 billion in 2008
He discussed Southwest’s new strategy as the Dallas-based carrier announced it lost $56 million in the fourth quarter including special items, giving Southwest its first back-to-back quarterly losses in nearly 18 years.
However, Southwest said it earned $178 million for the full year, continuing its unbroken string of annual profits that began in 1973.
The 2008 results were boosted by $1.3 billion in gains from fuel hedging, sparing Southwest from the huge losses that other carriers have announced or are expected to report.
AMR Corp., parent of American Airlines Inc., said Wednesday it lost $340 million in the fourth quarter and $2.07 billion for the full year. UAL Corp., parent of United Airlines Inc., posted a net loss of $1.03 billion for the fourth quarter and $5.35 billion for the year.
"We are very proud to report another profitable year in one of the most difficult years in aviation's 100-year-plus history,” Mr. Kelly said in a prepared statement. In the conference call, he added: "I for one am very glad that 2008 is over.”
Mr. Kelly said Southwest has cut its 2010 delivery of new Boeing 737-700 jets to 10, down from 16 firm orders and six options that it had held. It ended the year with 537 airplanes, and expects to be flying 535 at the end of 2009, with lease returns and retirements to cancel out 13 new deliveries.
Through 2012, Southwest has eliminated firm orders for nine airplanes and options to buy another 32 aircraft. Through 2018, it still has firm orders, options and purchase rights for 220, but the deliveries and potential deliveries are being pushed back.
Mr. Kelly said he was pleased at Southwest’s increased revenues, up 9.7 percent to $2.73 billion in the fourth quarter. However, Southwest like other airlines was hurt by higher jet fuel prices, increasing its operating expenses 12.6 percent to $2.66 billion.
Despite an operating profit of about $70 million, special items – particularly the requirement to reflect the market price of hedging contracts – put the airline in the red for the fourth quarter.
