Southwest Earns $152 Mill

[Britpilot]

But just wait 'til the hedges run out...then we'll really be in trouble!

:beer:

 

[Muppets]

This is good news because they are going to need at least 50 million to get me through training.

 

[outerlimits]

This is good news because they are going to need at least 50 million to get me through training.

I have been at the hotel when the SWA new hires where going through training. Very impressed, they stick together and seem pretty tight.

First class operation, in my view.

 

[Wesb737fo]

Well then negate the part where he says you are the highest paid because that has not been consistent over the years.

Hmm.... Curious reply .....What is the source of your angst? And ....of course nobody stays on top forever.

 

[Mamma]

No angst at all! I love SWA! Think my post just came across wrong. I just read the post to say "How can SWA pay the most and consistently make a profit whole nobody else can." SWA has not always paid the most but the lean and agile business model is what made them successful. It's taken awhile for everyone to finally cast away the pre-deregulation business plans and transform the companies into lean modern day operations. SWA cannot kick everyone else's butt as easy as they used to. So, to answer Satpak's question....those (most)airlines that have made the transformation have consistently made profits since the changes and the field is pretty much equalized. Now, the struggle is over labor pay equilibrium. There will be a sort of equilibrium that the market sets and that is starting to happen. USAPA is an an anchor on this equilibrium as are the carriers that pay rediculously low wages. Hopefully they all wake up and prevent the equilibrium being set on the low end or lower than it could be.

But, to the SWA guys, congrats on a nice profit in this horrendous economy!

 

[Green Banana]

MATH
$152M for Q4, $178M for 2011 with 558 aircraft = $319K per airplane.

 

[huronip]

MATH
$152M for Q4, $178M for 2011 with 558 aircraft = $319K per airplane.

Except those earnings numbers include Airtran as well. So about 700 planes. Your figures are a little high.

 

[On Your Six]

MATH
$152M for Q4, $178M for 2011 with 558 aircraft = $319K per airplane.

From the article:


Southwest's fourth-quarter net income rose 16 percent. Excluding special items, mostly gains from fuel-hedging contracts that rise in value with oil prices, Southwest's profit fell to $66 million, or 9 cents per share.


Without looking at the AT fleet, I am trying to figure out what the $319K per airplane means?

Anyway, it was still a good quarter and an overall profitable year for you. There will be about $500 million in merger related costs that you will have to overcome, but that happens in all mergers. Good for you guys.

Here are a couple more SWA articles that are interesting:



Southwest optimistic on ability to lift fares
By Rose Jacobs -- Financial Times
January 19, 2012

Managers at Southwest Airlines are optimistic about their ability to raise fares, even as higher fuel prices dented underlying earnings by 40 per cent last year.

Gary Kelly, executive chairman of the 40-year-old low-cost carrier, said a 31 per cent surge in revenues in the fourth quarter underscored longer-running trends. “With the exception of the middle of the year, we’ve had a very strong revenue performance and a very strong revenue environment,” he said. “I’m feeling pretty good.”

Net income in the three months to the end of December rose 13 per cent, to $152m. And while fuel costs dragged down underlying fourth-quarter earnings per share from $0.15 in 2010 to $0.09 last year, the result beat analyst expectations.

Full-year fuel costs rose 35 per cent from 2010 to 2011, producing an average price of $3.18 per gallon last year. In the fourth quarter, costs reached $3.29 per gallon. “High energy prices demand continued focus on improving productivity and eliminating waste,” said Mr Kelly, whose team insisted there was room in Southwest’s already lean business model for further cost-savings.

Two-thirds of full-year 29 per cent revenue growth came from the addition of budget rival AirTran Airways, which Southwest bought in May and is moving swiftly to integrate.

Mr Kelly also pointed to fleet modernisation as a way to mitigate fuel-price risk, citing a $19bn deal struck last month for 208 new Boeing aircraft, including 150 fuel-efficient versions of the popular 737. With jet fuel accounting for about 30 per cent of carriers’ costs, greener aircraft are an important hedge against price volatility.

Southwest shares rose 3 per cent in afternoon trading.

Over the year, average ticket prices and aircraft load factors increased. But the fuel price and fuel hedging – which produced a surprise third-quarter loss – weighed on earnings. Underlying net income for the year fell $220m, to $330m, on revenues of $15.7bn. Taking into account fuel hedging and special items, including the costs of the acquisition, diluted earnings per share fell from $0.61 to $0.23.

Savanthi Syth at Raymond James said the group’s hedging programme, which includes long-date hedges put in place in 2008, appeared to be under control: “It looks like they continue to chip away and reduce the negative impact,” she said.



Southwest: More Atlanta route changes coming
By Kelly Yamanouchi
The Atlanta Journal-Constitution
Thursday, January 19, 2012

Southwest Airlines is already figuring out ways to bring in higher revenue from AirTran Airways, as it works to fold AirTran's operations into its own.

"We'll have big schedule changes occurring within the AirTran unit throughout the year," Southwest chief executive Gary Kelly said during the company's analyst conference call Thursday on its $178 million profit report for 2011.

Southwest's average fare for all its flights -- including AirTran's -- rose 10 percent in the fourth quarter of 2011, the carrier said. And Dallas-based Southwest is counting on bringing in more revenue to increase the value of its acquisition of Orlando-based AirTran last year.

That's important in part because the AirTran deal was costly, due to inherited debt and integration costs.Southwest now expects the integration of AirTran to cost $500 million.

The company is pulling AirTran service out of cities where its service is not profitable. It has already discontinued AirTran's flights from Atlanta to Atlantic City, N.J., and in March AirTran will stop flying from Atlanta to Newport News, Va.

And as Southwest prepares to launch its own service in Atlanta next month, it is making plans to gradually dismantle AirTran's connecting hub, instead shifting to a large operation focusing more heavily on travelers going to or from Atlanta than those passing through.

"We can win customers in Atlanta," Kelly said. "We're the low-cost guy, we're the low-fare leader, and I think we'll do something different in the market."

Southwest has already found ways to eke out more revenue on AirTran, the company's executives said. That's done partly by altering the mix of fares charged by the airline, in the complex alchemy of varied prices paid by different passengers on each flight.

They expect to further increase revenue after this year, with additional changes to AirTran's schedule and by connecting the two airlines' route networks.




Godspeed!


The OYSter

 

[Green Banana]

Except those earnings numbers include Airtran as well. So about 700 planes. Your figures are a little high.

700 airplanes = $254K per airplane.

My point is simple. Profit per airplane.

 

[Green Banana]

nevermind

 

[Muppets]

I have been at the hotel when the SWA new hires where going through training. Very impressed, they stick together and seem pretty tight.

First class operation, in my view.

That will be a change....the pilots here at the Trans stick together like oil and water

 

[Max Powers]

MATH
$152M for Q4, $178M for 2011 with 558 aircraft = $319K per airplane.

Or more sadly put about 3k a day revenue per each 40 million dollar aircraft. The five guys down the street does better than a 40 million dollar jet! And this isn't just SWA but all airlines.

 

[fam62c]

Or more sadly put about 3k a day revenue per each 40 million dollar aircraft. The five guys down the street does better than a 40 million dollar jet! And this isn't just SWA but all airlines.

It's always been a low margin, capital intensive industry even during the best of times which don't come often in this business. It never ceases to amaze me that money always seems to be available to roll the dice on new-entrant carriers. I hope the industry as a whole is starting to get smarter and control capacity a little better. The aircraft leasing companies are what makes the industry possible and at the same time drives the overcapacity.

 

[dwojo1]

Or more sadly put about 3k a day revenue per each 40 million dollar aircraft. The five guys down the street does better than a 40 million dollar jet! And this isn't just SWA but all airlines.

Huh? Isn't it 319,000/365=$874/day per jet (not counting AT jets). That's income though - not revenue.

 

[SIG600]

Hmm.... Curious reply .....What is the source of your angst? And ....of course nobody stays on top forever.

SWA was never on top or industry leading, all the other's just fell so far that they found themselves on top. Quietly soldiering on, making money and maintaining a standard.

 

[Fubijaakr]

Doesn't matter how much, a profit is a profit. At least you don't have to look at continuous losses and lay on the bravado.