Updated: 01:38 PM EDT
Southwest CEO steps down as airline posts profit
By Jon Herskovitz, Reuters
Dim adsVB,poadsVB=0If ScriptEngineMajorVersion >=2 then adsVB=1Function adsAX(aX)on error resume nextIf adsVB=1 thenadsAX=Falseset po=CreateObject(aX)adsAX=IsObject(po)If (err) then adsAX=FalseElseadsAX=FalseEnd IfEnd FunctionDALLAS, July 15 (Reuters) - Southwest Airlines Inc.
Chief Executive Jim Parker stepped down on Thursday in a surprise move after the airline again posted a quarterly profit when most of its competitors will likely be in the red.
Parker, who had been the CEO for about three years, left the post for "personal reasons" and will be replaced by Chief Financial Officer Gary Kelly.
Parker helped guide Southwest through the turbulent period after the Sept. 11, 2001, attacks on the United States, when air travel plummeted and several major carriers looked for help in the bankruptcy courts after losing billions of dollars.
Despite the downturn, Southwest continued to show a profit. With Parker's departure, every one of the CEOs at the top seven U.S. airlines, with the exception of Northwest Airlines, has had, or has announced, CEO changes since the Sept. 11 attacks.
Parker had the difficult task in taking over as CEO from Herb Kelleher.
Kelleher, known for his sharp wit, flamboyant personality and keen business acumen, is a legend in the airlines industry, where he is simply known as "Herb." He is credited with building Southwest and creating the business model for a sustainable low-fare airline.
Parker, a labor lawyer, known for his quiet demeanor, did not actively seek the spotlight in his role as the head of the airline, which he joined in 1986.
But his leadership hit a snag earlier this year when he left contract talks with the airline's flight attendants on a new deal and was replaced by Kelleher. Sources in the talks said the negotiations had grown acrimonious and became personal in nature. Kelleher helped secure a new deal with the flight attendants.
PROFITS KEEP COMING
Low-cost carrier Southwest posted a lower quarterly profit, missing analyst estimates, as fuel costs soared. Second-quarter net earnings fell to $113 million, or 14 cents per share, from $246 million, or 30 cents a share, a year earlier.
The results missed Wall Street estimates for a profit of 16 cents per share, according to Reuters Estimates, and Southwest's shares fell 2 percent.
The 2003 second quarter included a $271 million government payment to help reimburse the airline for security costs. Excluding that benefit, the year-ago profit was $103 million, or 13 cents a share.
Southwest said soaring fuel costs cut into its bottom line, even though it has a strong hedging position in jet fuel through 2006.
Kelly, 49, is credited with the fuel hedging program that has helped Southwest save hundreds of millions of dollars, while other airlines have said operating costs will soar this year due to the high fuel prices.
Southwest also had a $12 million expense in the quarter for retroactive pay for flight attendants after reaching the tentative labor contract.
Wall Street analysts said the airline's revenue was higher than they expected, while unit costs were also higher than forecast.
The company said operating revenue for the second quarter increased 13.3 percent to $1.72 billion from $1.52 billion a year earlier.
Operating expenses increased 10.5 percent to $1.52 billion due to items such as higher labor costs, aircraft maintenance and advertising. It expects to see lower cost pressure for the remainder of the year.
"Based on our current revenue and cost outlook and barring any unforeseen event, we expect third-quarter 2004 earnings to exceed third-quarter 2003 earnings of $106 million," Parker said before word went out announcing his departure from Southwest.
(With additional reporting by Kathy Fieweger and Meredith Grossman Dubner in Chicago)
07/15/04 13:35 ET
Southwest CEO steps down as airline posts profit
By Jon Herskovitz, Reuters
Dim adsVB,poadsVB=0If ScriptEngineMajorVersion >=2 then adsVB=1Function adsAX(aX)on error resume nextIf adsVB=1 thenadsAX=Falseset po=CreateObject(aX)adsAX=IsObject(po)If (err) then adsAX=FalseElseadsAX=FalseEnd IfEnd FunctionDALLAS, July 15 (Reuters) - Southwest Airlines Inc.
Chief Executive Jim Parker stepped down on Thursday in a surprise move after the airline again posted a quarterly profit when most of its competitors will likely be in the red.
Parker, who had been the CEO for about three years, left the post for "personal reasons" and will be replaced by Chief Financial Officer Gary Kelly.
Parker helped guide Southwest through the turbulent period after the Sept. 11, 2001, attacks on the United States, when air travel plummeted and several major carriers looked for help in the bankruptcy courts after losing billions of dollars.
Despite the downturn, Southwest continued to show a profit. With Parker's departure, every one of the CEOs at the top seven U.S. airlines, with the exception of Northwest Airlines, has had, or has announced, CEO changes since the Sept. 11 attacks.
Parker had the difficult task in taking over as CEO from Herb Kelleher.
Kelleher, known for his sharp wit, flamboyant personality and keen business acumen, is a legend in the airlines industry, where he is simply known as "Herb." He is credited with building Southwest and creating the business model for a sustainable low-fare airline.
Parker, a labor lawyer, known for his quiet demeanor, did not actively seek the spotlight in his role as the head of the airline, which he joined in 1986.
But his leadership hit a snag earlier this year when he left contract talks with the airline's flight attendants on a new deal and was replaced by Kelleher. Sources in the talks said the negotiations had grown acrimonious and became personal in nature. Kelleher helped secure a new deal with the flight attendants.
PROFITS KEEP COMING
Low-cost carrier Southwest posted a lower quarterly profit, missing analyst estimates, as fuel costs soared. Second-quarter net earnings fell to $113 million, or 14 cents per share, from $246 million, or 30 cents a share, a year earlier.
The results missed Wall Street estimates for a profit of 16 cents per share, according to Reuters Estimates, and Southwest's shares fell 2 percent.
The 2003 second quarter included a $271 million government payment to help reimburse the airline for security costs. Excluding that benefit, the year-ago profit was $103 million, or 13 cents a share.
Southwest said soaring fuel costs cut into its bottom line, even though it has a strong hedging position in jet fuel through 2006.
Kelly, 49, is credited with the fuel hedging program that has helped Southwest save hundreds of millions of dollars, while other airlines have said operating costs will soar this year due to the high fuel prices.
Southwest also had a $12 million expense in the quarter for retroactive pay for flight attendants after reaching the tentative labor contract.
Wall Street analysts said the airline's revenue was higher than they expected, while unit costs were also higher than forecast.
The company said operating revenue for the second quarter increased 13.3 percent to $1.72 billion from $1.52 billion a year earlier.
Operating expenses increased 10.5 percent to $1.52 billion due to items such as higher labor costs, aircraft maintenance and advertising. It expects to see lower cost pressure for the remainder of the year.
"Based on our current revenue and cost outlook and barring any unforeseen event, we expect third-quarter 2004 earnings to exceed third-quarter 2003 earnings of $106 million," Parker said before word went out announcing his departure from Southwest.
(With additional reporting by Kathy Fieweger and Meredith Grossman Dubner in Chicago)
07/15/04 13:35 ET
