Record third quarter earnings for Southwest Airlines

Record third quarter earnings for Southwest Airlines

Southwest Airlines has reported its third quarter 2013 results, revealing record net income.

Excluding special items, the carrier made $241 million during the period, or $.34 per diluted share, compared to third quarter 2012 net income, excluding special items, of $97 million, or $.13 per diluted share.

Southwest chairman Gary Kelly said: “Third quarter revenues were a third quarter record, with total operating revenues per available seat mile (unit
revenues) increasing 4.5 per cent year-over-year. 

“Especially considering our increase in stage length and seat density, this is a very strong performance. 

“Further, we continue to have a high number of markets under development as we convert AirTran routes into Southwest routes and optimise our combined networks. 

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“Finally, about 15 per cent of our system is still operating under the AirTran brand. 

“As the network stabilises in the future, AirTran becomes fully converted, and fewer schedule changes are made, this should provide a further boost to unit revenues. 

“While unit revenue trends were impacted by the recent government shutdown, current bookings for the combined November/December holiday period are strong.”

The carrier returned approximately $178 million to shareholders during third quarter 2013 through the payment of $28 million in dividends and the repurchase of approximately $150 million in common stock under an accelerated share repurchase program executed in September 2013.

Since August 2011, the company has repurchased approximately $1.1 billion, or approximately 111 million shares, under its $1.5 billion share repurchase authorisation.

“We are on track with our plan to fully integrate AirTran into Southwest Airlines by the end of next year, and we expect to achieve approximately $400 million in annual net pre-tax synergies in 2013,” added Kelly.

“Our efforts to optimise our connected networks continued during third quarter, with the conversion of AirTran’s service at Grand Rapids Gerald R. Ford International Airport to Southwest. 

“Southwest’s entrance to western Michigan doubled the service previously offered by AirTran, with a total of six daily nonstop departures to Baltimore/Washington, Orlando, St. Louis, and Denver.

“We will take another significant step towards full integration with our November 2013 schedule, as we reschedule AirTran’s Atlanta flights into a point-to-point operation.

During third quarter 2013, the airline placed one new Boeing 737-800 and two previously owned Boeing 737-700s into active service, and retired four Boeing 737-500 aircraft. 

In addition, Southwest transitioned the first of AirTran’s 88 Boeing 717-200s out of the fleet, and removed 11 more from active service in preparation for transition. 

At the end of the third quarter, all Southwest Boeing 737-700s, 78 Boeing 737-300s, and 14 AirTran Boeing 737-700s converted to the Southwest livery had been retrofitted with the Evolve interior. 

Following a two percent year-over-year increase expected this year, our available seat miles are not expected to increase year-over-year in 2014.