My apologies in advance to transcription errors...GK & Laura Wright speak quickly & the reporters go even faster...I got tired of replaying everything so I've tried to highlight the observations that I thought were the most interesting:
Productivity gains:
1Q 04 80 employees per airplane
1Q 05 73.05 employees per airplane
1.7% reduction in employees over last year
30,974 1Q05 vs. 31,522 1Q04
Salaries & benefits reduced 1.6% per unit costs over 1Q04 (lower head counts)
Cost savings:
2.6% reduction in fuel burn over last year; all -700s have winglets now
19% mx costs reduced from 1Q04; -200s have all been retired saving $$, younger fleet & better savings out -700s, -700s engine remain on the airframe longer now allowing for more flight hours between changes; technology has allowed in house mx to do more major aircraft checks resulting in fewer (more expensive) outsourcing of mx inspections/checks
Fuel hedging...everyone knows the broken record, I won't repeat it
Revenue gains:
While other carriers may view mail contracts as bad, SWA doesn't....cargo business grew 36% ($34M total for the qtr) along with a gain of 41.7% in 4Q04...mail & cargo are great income generates, not huge but nickles add up to quarters, add up to $$
Code share adding $30-50m in additional income....2Q05 will be first qtr with PHX as additional codeshare city other than MDW, expect lots of traffic to Maui & HNL
"Other income" increased 19.4%...military charters, "partnerships" with credit card companies, hotel, cruise lines, rental car agencies, etc.
Reduced costs per seat mile (CASM) decreased 1.5% from 7.82 to 7.7 cents a mile
No charges associated with closing of reservation centers unlike last year at this time
Revenue per seat mile (RASMs) increased this quarter from 8.07 to 8.22, 1.9%
Operating margin was 6.4%, net margin was 4.6% (OK in this environment but below what SWA desires)
Odds & Ends
3% reduction in seat capacity in areas SWA operates in
Indy Air in IAD, ATA in MDW, United in LAX & MDW....bodes well for the future, fewer seats in the market place...SWA has had only 1 fare increase over the last quarter maxing out at $3, other carriers have had 3-4 totally upwards of $40
Pricing power still isn't strong, full fare purchases are still only about 36% of ticket sales
southwest.com bookings in 1Q05 filled 63% of seats vs. 1Q004 of 57%
$20.3m in profit sharing, can't remember the % of increase over 1Q04 but it was
$29.3m in 401K contributions...also an increase over 1Q04
Wages & benefits on a per unit basis still expected to either flat or decrease for 2Q05
14 new flights being added this summer during high traffic time, lots of growth in N/E to FL corridor....more airplanes but little or no additional new hires at stations allows for great productivity...growing oneself to be more productive is much easier than trying to shrink oneself into productivity which is what is being attempted at other carriers (editors note)
Bookings are good for PIT (4 May)
56 quarters in a row of profitability
Record Load factor in March, 73.7%
% of flights by region (note that SW region reduction...TX, i.e. Wright Amendment)
Region 05 04
NE---------14% 13%
SE---------16% 15%
SW---------15% 17%
MW---------16% 16%
West-------39% 39%
Capital expenditures in '05 & '06 will be $1.3B, '07 $1.2 B
All new aircraft 33 firm & 1 option will be bought with cash, same for this year
Avg fare 1Q05 $91.15, 1Q04 $89.28 (keep in mind slightly over 25% of that are taxes/fees imposed by the federal, state & local governments)
Avg pax length 1Q05 758, 1Q04 737 miles 2.8%
Avg aircraft stage length 596 vs 568 miles in 1Q04 4.9%
No "ammenities" planned in the near future, TV, XM radio....costs too much, may revisit later when revenue picture increases but not now
2nd Qtr Expectations
RASM will be down due to Easter falling in 1qtr...record LF's in 2Q04...bookings are lower than normal for April right now, at normal levels for May & June...airline bookings lag economic downturns & upturns so that doesn't appear to be a factor for next quarter according to GK or LW; also adding aircraft in April (capacity) which may dilute RASM & increase CASM
My thoughts....while I'm never going to disagree with brighter minds than mine (most anyone reading this) there is another factor that hasn't been brought out by the folks asking the questions or mentioned by GK....the auto has been one of the major competitors for SWA, not just other carriers....with fuel prices consistently over $2 a gallon now what in the past has been a barrier to the traveling public (hassle factor) now may be worth enduring by a few more folks when one compares the cost in dollars & time in driving distances that 6 months ago were affordable in a car but are now cheaper by a SWA plane....is it enough of a plus to drive folks to our gates? Don't know but it can't be ignored as the gallons do add up quickly.
Hope this has been of some use for those wishing to come to Southwest.....the outlook is still bright for continued hiring & interviewing through the summer...these facts (recommend listening to the webcast by going to "investor relations" at www.southwest.com & clicking on the webcast button) will hopefully give you some insight into the company & the philosophy that new employees need to have if they want to really contribute to the company....be productive, work hard, work as a team, provide great customer service and always be on the lookout for ways to do things better & cheaper.
Good luck to all in their pursuit of your aviation goals.
Pricing pressure in MHT/PVD/BWI area due to intense competition even with slight competitor seat reduction
Productivity gains:
1Q 04 80 employees per airplane
1Q 05 73.05 employees per airplane
1.7% reduction in employees over last year
30,974 1Q05 vs. 31,522 1Q04
Salaries & benefits reduced 1.6% per unit costs over 1Q04 (lower head counts)
Cost savings:
2.6% reduction in fuel burn over last year; all -700s have winglets now
19% mx costs reduced from 1Q04; -200s have all been retired saving $$, younger fleet & better savings out -700s, -700s engine remain on the airframe longer now allowing for more flight hours between changes; technology has allowed in house mx to do more major aircraft checks resulting in fewer (more expensive) outsourcing of mx inspections/checks
Fuel hedging...everyone knows the broken record, I won't repeat it
Revenue gains:
While other carriers may view mail contracts as bad, SWA doesn't....cargo business grew 36% ($34M total for the qtr) along with a gain of 41.7% in 4Q04...mail & cargo are great income generates, not huge but nickles add up to quarters, add up to $$
Code share adding $30-50m in additional income....2Q05 will be first qtr with PHX as additional codeshare city other than MDW, expect lots of traffic to Maui & HNL
"Other income" increased 19.4%...military charters, "partnerships" with credit card companies, hotel, cruise lines, rental car agencies, etc.
Reduced costs per seat mile (CASM) decreased 1.5% from 7.82 to 7.7 cents a mile
No charges associated with closing of reservation centers unlike last year at this time
Revenue per seat mile (RASMs) increased this quarter from 8.07 to 8.22, 1.9%
Operating margin was 6.4%, net margin was 4.6% (OK in this environment but below what SWA desires)
Odds & Ends
3% reduction in seat capacity in areas SWA operates in
Indy Air in IAD, ATA in MDW, United in LAX & MDW....bodes well for the future, fewer seats in the market place...SWA has had only 1 fare increase over the last quarter maxing out at $3, other carriers have had 3-4 totally upwards of $40
Pricing power still isn't strong, full fare purchases are still only about 36% of ticket sales
southwest.com bookings in 1Q05 filled 63% of seats vs. 1Q004 of 57%
$20.3m in profit sharing, can't remember the % of increase over 1Q04 but it was
$29.3m in 401K contributions...also an increase over 1Q04
Wages & benefits on a per unit basis still expected to either flat or decrease for 2Q05
14 new flights being added this summer during high traffic time, lots of growth in N/E to FL corridor....more airplanes but little or no additional new hires at stations allows for great productivity...growing oneself to be more productive is much easier than trying to shrink oneself into productivity which is what is being attempted at other carriers (editors note)
Bookings are good for PIT (4 May)
56 quarters in a row of profitability
Record Load factor in March, 73.7%
% of flights by region (note that SW region reduction...TX, i.e. Wright Amendment)
Region 05 04
NE---------14% 13%
SE---------16% 15%
SW---------15% 17%
MW---------16% 16%
West-------39% 39%
Capital expenditures in '05 & '06 will be $1.3B, '07 $1.2 B
All new aircraft 33 firm & 1 option will be bought with cash, same for this year
Avg fare 1Q05 $91.15, 1Q04 $89.28 (keep in mind slightly over 25% of that are taxes/fees imposed by the federal, state & local governments)
Avg pax length 1Q05 758, 1Q04 737 miles 2.8%
Avg aircraft stage length 596 vs 568 miles in 1Q04 4.9%
No "ammenities" planned in the near future, TV, XM radio....costs too much, may revisit later when revenue picture increases but not now
2nd Qtr Expectations
RASM will be down due to Easter falling in 1qtr...record LF's in 2Q04...bookings are lower than normal for April right now, at normal levels for May & June...airline bookings lag economic downturns & upturns so that doesn't appear to be a factor for next quarter according to GK or LW; also adding aircraft in April (capacity) which may dilute RASM & increase CASM
My thoughts....while I'm never going to disagree with brighter minds than mine (most anyone reading this) there is another factor that hasn't been brought out by the folks asking the questions or mentioned by GK....the auto has been one of the major competitors for SWA, not just other carriers....with fuel prices consistently over $2 a gallon now what in the past has been a barrier to the traveling public (hassle factor) now may be worth enduring by a few more folks when one compares the cost in dollars & time in driving distances that 6 months ago were affordable in a car but are now cheaper by a SWA plane....is it enough of a plus to drive folks to our gates? Don't know but it can't be ignored as the gallons do add up quickly.
Hope this has been of some use for those wishing to come to Southwest.....the outlook is still bright for continued hiring & interviewing through the summer...these facts (recommend listening to the webcast by going to "investor relations" at www.southwest.com & clicking on the webcast button) will hopefully give you some insight into the company & the philosophy that new employees need to have if they want to really contribute to the company....be productive, work hard, work as a team, provide great customer service and always be on the lookout for ways to do things better & cheaper.
Good luck to all in their pursuit of your aviation goals.
Pricing pressure in MHT/PVD/BWI area due to intense competition even with slight competitor seat reduction
