Southwest Airlines` net income for the year ended December 31, 1999 was $474.4 million, as compared to 1998 net income of $433.4 million, an increase of 9.4 percent. Diluted net income per share was $.89 in 1999, as compared to $.82 per share in 1998. Operating revenues for 1999 increased 13.7 percent to $4.74 billion while operating expenses increased 13.6 percent to $3.95 billion, resulting in operating income of $781.6 million, up 14.3 percent from 1998. The Company`s load factor for 1999 was a record 69.0 percent.
Southwest Airlines` diluted net income per share was $.18 for fourth quarter 1999 versus $.19 in fourth quarter 1998. Operating income was down 3.3 percent, to $154.2 million, versus fourth quarter 1998, while net income was down 6.6 percent to $93.8 million.
Total operating revenues for fourth quarter 1999 increased 15.0 percent to $1.2 billion, compared to $1.05 billion for fourth quarter 1998. Revenue passenger miles (RPMs) increased 19.4 percent in fourth quarter 1999 as compared to a 13.1 percent increase in available seat miles (ASMs), resulting in a 3.5 point increase in load factor to 67.3 percent. The passenger revenue yield per RPM decreased 3.7 percent to $.1225 from $.1272 in fourth quarter 1998. Operating revenue yield per ASM, however, increased 1.6 percent to $.0867 from $.0853 in fourth quarter 1998.
Operating expenses per ASM for fourth quarter 1999 increased 4.6 percent to $.0756, compared to $.0723 for fourth quarter 1998, primarily due to a 54.5 percent increase in average jet fuel prices. Excluding fuel and oil expense, operating expenses per ASM for fourth quarter 1999 was $.0640, compared to $.0647 for fourth quarter 1998, a decrease of 1.1 percent.
Herbert D. Kelleher, Chairman, President, and Chief Executive Officer, said: “We are pleased to report 1999 earnings of $474.4 million versus a record $433.4 million last year. As we anticipated, our fourth quarter 1999 earnings of $93.8 million were adversely affected by significantly higher fuel prices and fell below last year’s fourth quarter earnings of $100.4 million.
“With the exception of a late December decline in traffic due to year-2000 concerns, we enjoyed positive revenue momentum throughout fourth quarter 1999. Customer demand was strong, resulting in a fourth quarter load factor of 67.3 percent, up 3.5 points from fourth quarter 1998, and a 1.6 percent increase in unit revenue. Although early 2000 traffic and bookings were also negatively impacted by year-2000 worries, we are encouraged by recent traffic and booking trends. Bookings continue to strengthen, and we now expect our January 2000 load factor to be in line with last year’s solid performance. Bookings for the remainder of the first quarter are also improving.
“Our overall quarterly unit costs were up 4.6 percent to $.0756 due to significantly higher energy costs. Our jet fuel cost per gallon averaged $.67 in fourth quarter 1999 versus $.43 per gallon in fourth quarter 1998, an increase of 54.5 percent. Currently, jet fuel costs are averaging approximately $.79 per gallon. We were extremely pleased with our fourth quarter 1999 nonfuel unit cost performance. Excluding fuel, unit costs decreased 1.1 percent, and we are hopeful we will experience a modest nonfuel unit cost decline again in first quarter 2000.
“In 2000, we will take delivery of 31 new Boeing 737-700 aircraft, and we recently entered into a long-term lease agreement for an additional Boeing 737-700 aircraft, which brings the total aircraft additions planned for 2000 to 32. We are excited about bringing our low fares and legendary Customer service to Albany International Airport in May 2000 and expect to add at least one more new city in 2000. We began service to Hartford’s Bradley International Airport on October 31, 1999 with nonstop service to Baltimore/Washington, Chicago Midway, Nashville, and Orlando. We continue to be very pleased with the performance of our new cities and our eastern expansion efforts.
“During fourth quarter 1999, we increased our liquidity with the issuance of $256 million of debt secured by aircraft. We ended the year with $418.8 million in cash plus our available and unused bank credit facility of $475 million.
“As we enter the new millennium, I pay grateful tribute once again to the People of Southwest for their many accomplishments over the past decade. Because of their personal accountability, big hearts and unwavering Southwest Spirit, millions of Americans now have the freedom to fly across the country, and Southwest has become the fourth largest airline in terms of domestic passengers boarded, while also enjoying 27 consecutive years of profitability, and job security. As a result of our Peoples’ unity, caring natures, and genuine respect for others, for the third year in a row Fortune magazine recently recognized Southwest as one of the top five companies to work for in America. Congratulations to each and every one of our 29,000+ Employees for this well-deserved honor.” This release, as well as past releases, can be accessed on the Southwest Airlines internet site at: http://www.southwest.com.