The Prussian
Stecknadelkopf
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Press ReleaseSource: Southwest Airlines
Southwest Airlines Reports Third Quarter Earnings; 66th Consecutive Quarter of Profitability
Thursday October 18, 7:40 am ET
DALLAS, Oct. 18 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV - News) today reported its third quarter 2007 results. Net income for third quarter 2007 was $162 million, or $.22 per diluted share, compared to $48 million, or $.06 per diluted share, for third quarter 2006. Economic net income for third quarter 2007 was $133 million, or $.18 per diluted share, compared to $154 million, or $.19 per diluted share, for third quarter 2006. (Refer to the reconciliation in the accompanying tables for further information regarding economic results.) The third quarter 2007 results include the following two charges, which were not reflected in First Call's mean estimate for economic net income of $.21 per diluted share:
-- $25 million charge ($.02 per diluted share impact, net of profitsharing and income tax effects) related to the Company's recent voluntary early-out program -- $11 million income tax charge ($.01 per diluted share impact) related to a change in Illinois state income tax law
Gary C. Kelly, CEO, stated: "Our fourth quarter 2007 revenue initiatives are well underway and on track with our planned implementation schedule. We began slowing our capacity growth rate this month and have trimmed our route system. We are very enthused by the response to our new Customer boarding method, which will be implemented system-wide on November 8, 2007. In connection with that, we have begun our "extreme gate makeover" to improve the Customer airport experience with an anticipated completion date of mid-year 2008. We will soon announce enhancements to our fare structure and Rapid Rewards frequent flyer program, supported by a new marketing and advertising campaign. We will also begin enhancing our revenue management structure, technology, techniques, and processes in fourth quarter 2007. We are continuing efforts to provide travel agent and professional travel manager partners with increased and cost effective access to our fares and inventory. We are particularly pleased with the recent expansion of our agreement with Travelport's Galileo to include Worldspan, another of Travelport's global distribution systems. We are very excited about these major revenue initiatives as well as our longer term ancillary and codeshare revenue opportunities, and are determined to overcome higher fuel costs and achieve our financial targets.
"With respect to our third quarter 2007 revenue performance, we are pleased that operating unit revenue comparisons turned positive. While year-over-year comparisons were favorably impacted by the August 2006 terrorist threat and related carryon restrictions, third quarter 2007 operating revenues of $2.6 billion were a record. This performance was driven by a record third quarter 2007 load factor of 76.6 percent, which resulted from strong demand for low fares. Based on current revenue trends, bookings, and planned revenue initiatives, and barring a slowdown in the domestic economy, we expect fourth quarter 2007 operating unit revenues to exceed year ago levels.
"Market crude oil prices hitting all-time high levels further accentuates our cost challenge. Despite favorable cash settlements from our fuel hedging program of $189 million for third quarter 2007, our economic fuel cost per gallon of $1.69 rose 7.6 percent from a year ago. We have derivative contracts in place for approximately 90 percent of our fourth quarter 2007 estimated fuel consumption, capped at an average crude-equivalent price of approximately $51 per barrel (compared to approximately 85 percent at approximately $43 per barrel for fourth quarter 2006). Based on this derivative position and present market prices, we are currently estimating our fourth quarter 2007 economic fuel costs per gallon to be in the $1.80 range.
"We have derivative contracts for approximately 70 percent of our estimated 2008 fuel consumption at an average crude-equivalent price of approximately $51 per barrel; approximately 55 percent of our estimated 2009 fuel consumption at an average crude-equivalent price of approximately $51 per barrel; over 25 percent of our estimated 2010 fuel consumption at an average crude-equivalent price of approximately $63 per barrel; and over 15 percent of our estimated 2011 and 2012 fuel consumption at an average crude-equivalent price of approximately $64 and $63 per barrel, respectively.
"Excluding fuel, third quarter 2007 economic unit costs increased 2.2 percent from a year ago, including the $25 million charge related to our recent voluntary early-out program. Based on current trends and various cost pressures, we presently expect our fourth quarter 2007 economic unit costs, excluding fuel, to exceed third quarter 2007's 6.52 cents.
"As previously announced, we are pruning our flight schedule in fourth quarter 2007 and slowing our fourth quarter 2007 and full year 2008 available seat mile growth to the five to six percent range on a year-over-year basis. We have nine and 29 firm Boeing 737-700 aircraft deliveries in fourth quarter 2007 and full year 2008, respectively. We currently plan to reduce 2008 fleet growth by at least ten aircraft, bringing 2008 planned additions to no more than 19 net aircraft.
"We are pleased with the Bay area's response to our renewed San Francisco International Airport service, which started in August. We are also pleased with the strong Customer demand for our new low fare service offered at Dallas Love Field as a result of the Wright Amendment Reform Act of 2006, which increased third quarter 2007 revenues by approximately $32 million.
"As our Employees strive to counter higher fuel costs, they remain dedicated to upholding our superb Customer Satisfaction record, and they consistently receive high marks in Ontime Performance. Recent Southwest honors include being named the top airline brand for customer experience in the nationwide study performed by RTC Relationship Marketing. The study correlated brand performance, treatment of customers, and sense of community as the major drivers of overall brand experience. We also received the Frost & Sullivan 2007 CEO Choice Award for the Overall Best Airline in the United States. We are very proud that Southwest Cargo recently received its 13th consecutive Quest for Quality Award, placing first in Ontime Performance, Value and Customer Service."
Southwest Airlines was also included in InformationWeek 500's annual listing honoring Southwest Airlines' extraordinary ability to deliver business value through technology innovation and execution and was included in Hispanic Business Magazine's Diversity Elite 60. Southwest will discuss its third quarter 2007 results on a conference call at 11:30 a.m. Eastern Time today. A live broadcast of the conference call will be available at http://southwest.com/?src
Southwest Airlines Reports Third Quarter Earnings; 66th Consecutive Quarter of Profitability
Thursday October 18, 7:40 am ET
DALLAS, Oct. 18 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV - News) today reported its third quarter 2007 results. Net income for third quarter 2007 was $162 million, or $.22 per diluted share, compared to $48 million, or $.06 per diluted share, for third quarter 2006. Economic net income for third quarter 2007 was $133 million, or $.18 per diluted share, compared to $154 million, or $.19 per diluted share, for third quarter 2006. (Refer to the reconciliation in the accompanying tables for further information regarding economic results.) The third quarter 2007 results include the following two charges, which were not reflected in First Call's mean estimate for economic net income of $.21 per diluted share:
-- $25 million charge ($.02 per diluted share impact, net of profitsharing and income tax effects) related to the Company's recent voluntary early-out program -- $11 million income tax charge ($.01 per diluted share impact) related to a change in Illinois state income tax law
Gary C. Kelly, CEO, stated: "Our fourth quarter 2007 revenue initiatives are well underway and on track with our planned implementation schedule. We began slowing our capacity growth rate this month and have trimmed our route system. We are very enthused by the response to our new Customer boarding method, which will be implemented system-wide on November 8, 2007. In connection with that, we have begun our "extreme gate makeover" to improve the Customer airport experience with an anticipated completion date of mid-year 2008. We will soon announce enhancements to our fare structure and Rapid Rewards frequent flyer program, supported by a new marketing and advertising campaign. We will also begin enhancing our revenue management structure, technology, techniques, and processes in fourth quarter 2007. We are continuing efforts to provide travel agent and professional travel manager partners with increased and cost effective access to our fares and inventory. We are particularly pleased with the recent expansion of our agreement with Travelport's Galileo to include Worldspan, another of Travelport's global distribution systems. We are very excited about these major revenue initiatives as well as our longer term ancillary and codeshare revenue opportunities, and are determined to overcome higher fuel costs and achieve our financial targets.
"With respect to our third quarter 2007 revenue performance, we are pleased that operating unit revenue comparisons turned positive. While year-over-year comparisons were favorably impacted by the August 2006 terrorist threat and related carryon restrictions, third quarter 2007 operating revenues of $2.6 billion were a record. This performance was driven by a record third quarter 2007 load factor of 76.6 percent, which resulted from strong demand for low fares. Based on current revenue trends, bookings, and planned revenue initiatives, and barring a slowdown in the domestic economy, we expect fourth quarter 2007 operating unit revenues to exceed year ago levels.
"Market crude oil prices hitting all-time high levels further accentuates our cost challenge. Despite favorable cash settlements from our fuel hedging program of $189 million for third quarter 2007, our economic fuel cost per gallon of $1.69 rose 7.6 percent from a year ago. We have derivative contracts in place for approximately 90 percent of our fourth quarter 2007 estimated fuel consumption, capped at an average crude-equivalent price of approximately $51 per barrel (compared to approximately 85 percent at approximately $43 per barrel for fourth quarter 2006). Based on this derivative position and present market prices, we are currently estimating our fourth quarter 2007 economic fuel costs per gallon to be in the $1.80 range.
"We have derivative contracts for approximately 70 percent of our estimated 2008 fuel consumption at an average crude-equivalent price of approximately $51 per barrel; approximately 55 percent of our estimated 2009 fuel consumption at an average crude-equivalent price of approximately $51 per barrel; over 25 percent of our estimated 2010 fuel consumption at an average crude-equivalent price of approximately $63 per barrel; and over 15 percent of our estimated 2011 and 2012 fuel consumption at an average crude-equivalent price of approximately $64 and $63 per barrel, respectively.
"Excluding fuel, third quarter 2007 economic unit costs increased 2.2 percent from a year ago, including the $25 million charge related to our recent voluntary early-out program. Based on current trends and various cost pressures, we presently expect our fourth quarter 2007 economic unit costs, excluding fuel, to exceed third quarter 2007's 6.52 cents.
"As previously announced, we are pruning our flight schedule in fourth quarter 2007 and slowing our fourth quarter 2007 and full year 2008 available seat mile growth to the five to six percent range on a year-over-year basis. We have nine and 29 firm Boeing 737-700 aircraft deliveries in fourth quarter 2007 and full year 2008, respectively. We currently plan to reduce 2008 fleet growth by at least ten aircraft, bringing 2008 planned additions to no more than 19 net aircraft.
"We are pleased with the Bay area's response to our renewed San Francisco International Airport service, which started in August. We are also pleased with the strong Customer demand for our new low fare service offered at Dallas Love Field as a result of the Wright Amendment Reform Act of 2006, which increased third quarter 2007 revenues by approximately $32 million.
"As our Employees strive to counter higher fuel costs, they remain dedicated to upholding our superb Customer Satisfaction record, and they consistently receive high marks in Ontime Performance. Recent Southwest honors include being named the top airline brand for customer experience in the nationwide study performed by RTC Relationship Marketing. The study correlated brand performance, treatment of customers, and sense of community as the major drivers of overall brand experience. We also received the Frost & Sullivan 2007 CEO Choice Award for the Overall Best Airline in the United States. We are very proud that Southwest Cargo recently received its 13th consecutive Quest for Quality Award, placing first in Ontime Performance, Value and Customer Service."
Southwest Airlines was also included in InformationWeek 500's annual listing honoring Southwest Airlines' extraordinary ability to deliver business value through technology innovation and execution and was included in Hispanic Business Magazine's Diversity Elite 60. Southwest will discuss its third quarter 2007 results on a conference call at 11:30 a.m. Eastern Time today. A live broadcast of the conference call will be available at http://southwest.com/?src
