On Your Six
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Southwest says capacity growth unlikely into 2013
Southwest Airlines likely to hold off on expanding passenger capacity into 2013
Tuesday September 13, 2011
DALLAS (AP) -- Southwest Airlines Co. said Tuesday that it is focused on boosting earnings after buying rival discount airline AirTran, and that it is holding off on expanding its fleet because of the weak economy. Southwest's purchase of AirTran earlier this year boosted the Dallas company's passenger-carrying capacity by about 25 percent. But now consumers, hurt by high unemployment and the recent turmoil in financial markets, may cut back on leisure trips.
September bookings "look good at this point," said Southwest's Chief Financial Officer Laura Wright on Tuesday at an investor conference in New York. But she cautioned that the airline often is late to feel the effects of an economic downturn.
Southwest has "a pretty cautious outlook," Wright said. She suggested that a freeze on growth in passenger capacity would last even longer than the company had previously predicted. "We aren't growing on a (capacity) basis as we look into 2012 and likely 2013," Wright said. "But we have a huge opportunity to grow our earnings associated with that 25 percent increase in size that we've just digested."
Southwest had said in August that it expected passenger capacity to be flat or slightly down in 2012 from 2011 levels. If other airlines hold the line on capacity that could limit seats and push up fares. Southwest collected $56 million in extra revenue in July and August, Wright said. Many airlines lifted fares after federal excise taxes on tickets expired. By raising prices to match the amount of the expired taxes, the airlines got more money but consumers paid the same total price for tickets. The taxes were restored last month.
Southwest stock rose 35 cents, or 4.4 percent, to close Tuesday at $8.31. Other airline stocks also surged as carriers, including Delta Air Lines Inc.
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Stagnation. Looks like not only Delta will be slowing down the growth. 25% growth in size? That must be the addition of AIRTRAN. Sounds like they won't just park every plane and take a loss, and instead they are counting on revenue from that addition. Throw in possible arbitration with the AT guys, and there could be some frowns out there, including Sasha, who may never get that upgrade. He is probably wishing he were back at Eastern, and thinking about the time he upgraded on the Connie and then the DC-6. Those trips from Key West to Idlewild must have been fun for him, and being the CP of the New Amsterdam base was thrilling probably. I wonder if he thinks about all of that while running (literally RUNNING) around the plane in ELP on the quick turn to Austin?
Godspeed!
OYS
Southwest Airlines likely to hold off on expanding passenger capacity into 2013
Tuesday September 13, 2011
DALLAS (AP) -- Southwest Airlines Co. said Tuesday that it is focused on boosting earnings after buying rival discount airline AirTran, and that it is holding off on expanding its fleet because of the weak economy. Southwest's purchase of AirTran earlier this year boosted the Dallas company's passenger-carrying capacity by about 25 percent. But now consumers, hurt by high unemployment and the recent turmoil in financial markets, may cut back on leisure trips.
September bookings "look good at this point," said Southwest's Chief Financial Officer Laura Wright on Tuesday at an investor conference in New York. But she cautioned that the airline often is late to feel the effects of an economic downturn.
Southwest has "a pretty cautious outlook," Wright said. She suggested that a freeze on growth in passenger capacity would last even longer than the company had previously predicted. "We aren't growing on a (capacity) basis as we look into 2012 and likely 2013," Wright said. "But we have a huge opportunity to grow our earnings associated with that 25 percent increase in size that we've just digested."
Southwest had said in August that it expected passenger capacity to be flat or slightly down in 2012 from 2011 levels. If other airlines hold the line on capacity that could limit seats and push up fares. Southwest collected $56 million in extra revenue in July and August, Wright said. Many airlines lifted fares after federal excise taxes on tickets expired. By raising prices to match the amount of the expired taxes, the airlines got more money but consumers paid the same total price for tickets. The taxes were restored last month.
Southwest stock rose 35 cents, or 4.4 percent, to close Tuesday at $8.31. Other airline stocks also surged as carriers, including Delta Air Lines Inc.
***********
Stagnation. Looks like not only Delta will be slowing down the growth. 25% growth in size? That must be the addition of AIRTRAN. Sounds like they won't just park every plane and take a loss, and instead they are counting on revenue from that addition. Throw in possible arbitration with the AT guys, and there could be some frowns out there, including Sasha, who may never get that upgrade. He is probably wishing he were back at Eastern, and thinking about the time he upgraded on the Connie and then the DC-6. Those trips from Key West to Idlewild must have been fun for him, and being the CP of the New Amsterdam base was thrilling probably. I wonder if he thinks about all of that while running (literally RUNNING) around the plane in ELP on the quick turn to Austin?
Godspeed!
OYS
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