Southwest Airlines’ second-quarter profit down slightly

Posted Thursday, Jul. 25, 2013  comments  Print Reprints

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Southwest Airlines’ second-quarter profit declined slightly, 1.7 percent, as the airline ran more fare sales to help offset the toll of federal budget cuts on consumer and business travel demand.

The Dallas-based carrier reported a $224 million profit, while revenue grew by 0.6 percent to $4.6 billion. Southwest said it increased its capacity by 3 percent in the quarter.

“The domestic economy was worse than we had assumed in our second quarter plan,” said Southwest’s chief executive Gary Kelly. The carrier launched aggressive fare sales in the quarter to stimulate business, and bookings for June and July were solid compared with the softness seen in May and June, he said.

Lower fuel prices also helped the carrier’s earnings. Southwest said it spent $3.06 per gallon on jet fuel in the quarter, down from $3.22 in the second quarter of 2012. It expects fuel costs to be in the $3.05 to $3.10 per gallon range for the third quarter, also lower than last year.

Although passenger traffic grew by 3 percent, the average one-way fare rose less than a dollar to $151.23. The carrier said it is on schedule to repaint AirTran planes and combine the two carriers by the end of next year.

Excluding one-time accounting items, the carrier said its income was $274 million, or 38 cents per share, matching Wall Street estimates, according to First Call.

Shares of Southwest closed at $13.81, up 5 cents, on Thursday.

During the quarter, the carrier repurchased about 18 million shares, worth about $251 million. Southwest has a cash balance of $3.7 billion along with a $1 billion revolving credit facility.

Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk

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