UPDATE - Southwest Airlines sees 2nd-qtr profit,lower costs
Thursday June 17, 6:39 pm ET
By Jon Herskovitz
(Adds CEO comments on 7E7)
NEW YORK, June 17 (Reuters) - The chief executive of Southwest Airlines (NYSE:LUV - News) on Thursday said the low-fare carrier expects to post a second-quarter profit even as it struggles with the challenge of soaring jet fuel prices.
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Chief Executive Jim Parker, speaking to reporters during an in-flight press conference to mark the arrival of the company's 400th aircraft, a Boeing 737-700, also said he sees lower unit costs for the second half of 2004 from a year ago.
Parker said Southwest's costs likely peaked in the second quarter and that items such as increased productivity should push costs lower, despite record high fuel prices.
"Unless something dramatic happens, we expect to make a profit in the second quarter," he said.
Dallas-based Southwest, the No. 6 U.S. airline, has been consistently profitable for 31 years. Analysts, on average, expect Southwest to post a profit of 16 cents a share for the second quarter, according to Reuters Estimates.
Parker said the airline sees a strong summer travel season, which should help boost revenue. He added that a pickup in economic activity earlier this year has also led to an increase in business travel.
Chief Financial Officer Gary Kelly said high fuel prices have hurt Southwest. He said that even though the airline is about 80 percent hedged on fuel -- in a better position than any of its competitors -- the airline will spend about $100 million more on jet fuel this year than it had budgeted.
Jet fuel is the industry's second-biggest operating expense after labor. Southwest recently raised some fares $1 to $2 each way to offset rising jet fuel expenses.
Parker said the carrier was not interested in ordering the new Boeing (NYSE:BA - News) 7E7, a plane Boeing bills as offering high fuel efficiency and low operating costs.
Southwest has a fleet comprised solely of Boeing 737 aircraft and Parker said if the airplane maker designs a smaller version of the 7E7 that offers a seating capacity similar to the 737, then Southwest may be interested.
Parker said he did not have numbers for how many Southwest employees will enlist in an early retirement program the company announced recently. The program, which was offered to 33,000 of the airline's 34,000 workers, closes on June 25. He said more details should be available around the time the carrier releases its second-quarter results.
"As we have become more efficient, we have probably hired more people than we need to operate efficiently," Parker said, adding that it was not in the nature of the company to let people go.
Southwest has never laid off workers.
Parker also told reporters he did not think in-flight entertainment on some Southwest flights, such as transcontinental routes, would be a good strategy because it would prevent the carrier from marketing consistent products across its fleet. The company also announced during the flight on Thursday that it will add 18 new daily flights in September and October, including a new daily nonstop between Tampa Bay, Florida, and Buffalo, New York and a new daily nonstop between Houston and Oakland, California
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BTW, I flew AC#464, aircraft 401 up from SAT to DAL on Wed to the mx hanger...a beautiful site after having winglets put on it...sorry I missed it by 1 number but 401 isn't bad either!
Go out & have a great weekend. Flightinfo will be shut down for the weekend at the request of all the wives whose husbands will not leave this place!!!! Put your hands on the table & step away from the computer, now move your hand to the power off switch...yes you can do it, OK, that's good...just press it, it won't hurt.....so long & have a great weekend! God Bless,
chase
p.s. look forward to seeing a lot of new hires at the new hire party Sunday night in Dallas....I'm bringing a special guest that many will know & be glad to see....the mystery begins...see you at 7PM
Thursday June 17, 6:39 pm ET
By Jon Herskovitz
(Adds CEO comments on 7E7)
NEW YORK, June 17 (Reuters) - The chief executive of Southwest Airlines (NYSE:LUV - News) on Thursday said the low-fare carrier expects to post a second-quarter profit even as it struggles with the challenge of soaring jet fuel prices.
[size=-2]ADVERTISEMENT[/size]
Chief Executive Jim Parker, speaking to reporters during an in-flight press conference to mark the arrival of the company's 400th aircraft, a Boeing 737-700, also said he sees lower unit costs for the second half of 2004 from a year ago.
Parker said Southwest's costs likely peaked in the second quarter and that items such as increased productivity should push costs lower, despite record high fuel prices.
"Unless something dramatic happens, we expect to make a profit in the second quarter," he said.
Dallas-based Southwest, the No. 6 U.S. airline, has been consistently profitable for 31 years. Analysts, on average, expect Southwest to post a profit of 16 cents a share for the second quarter, according to Reuters Estimates.
Parker said the airline sees a strong summer travel season, which should help boost revenue. He added that a pickup in economic activity earlier this year has also led to an increase in business travel.
Chief Financial Officer Gary Kelly said high fuel prices have hurt Southwest. He said that even though the airline is about 80 percent hedged on fuel -- in a better position than any of its competitors -- the airline will spend about $100 million more on jet fuel this year than it had budgeted.
Jet fuel is the industry's second-biggest operating expense after labor. Southwest recently raised some fares $1 to $2 each way to offset rising jet fuel expenses.
Parker said the carrier was not interested in ordering the new Boeing (NYSE:BA - News) 7E7, a plane Boeing bills as offering high fuel efficiency and low operating costs.
Southwest has a fleet comprised solely of Boeing 737 aircraft and Parker said if the airplane maker designs a smaller version of the 7E7 that offers a seating capacity similar to the 737, then Southwest may be interested.
Parker said he did not have numbers for how many Southwest employees will enlist in an early retirement program the company announced recently. The program, which was offered to 33,000 of the airline's 34,000 workers, closes on June 25. He said more details should be available around the time the carrier releases its second-quarter results.
"As we have become more efficient, we have probably hired more people than we need to operate efficiently," Parker said, adding that it was not in the nature of the company to let people go.
Southwest has never laid off workers.
Parker also told reporters he did not think in-flight entertainment on some Southwest flights, such as transcontinental routes, would be a good strategy because it would prevent the carrier from marketing consistent products across its fleet. The company also announced during the flight on Thursday that it will add 18 new daily flights in September and October, including a new daily nonstop between Tampa Bay, Florida, and Buffalo, New York and a new daily nonstop between Houston and Oakland, California
_______
BTW, I flew AC#464, aircraft 401 up from SAT to DAL on Wed to the mx hanger...a beautiful site after having winglets put on it...sorry I missed it by 1 number but 401 isn't bad either!
chase
p.s. look forward to seeing a lot of new hires at the new hire party Sunday night in Dallas....I'm bringing a special guest that many will know & be glad to see....the mystery begins...see you at 7PM
Who knows? How about some more clues, Chase?
