Southwest Airlines almost tripled its first-quarter profit as lower fuel prices and new flights out of Dallas Love Field boosted the airline’s earnings.
The Dallas-based carrier posted a record profit of $453 million, up from $152 million in the first quarter of 2014. Revenues grew six percent to $4.41 billion.
Chief Executive Officer Gary Kelly said customer demand remained strong and he expects the airline to post solid earnings in the second quarter as well. With the expiration of the Wright Amendment restrictions last fall, Southwest has grown from 115 daily flights to currently 166 at Dallas Love Field and its first-quarter traffic there increased 145.5 percent.
“It is very clear that the demand is much greater than 20 gates,” Kelly said, calling the new service a “raging success.” Southwest controls 18 of the 20 gates at the downtown Dallas airport. Under terms of the compromise agreement that ended the Wright Amendment, Love Field is capped at 20 gates.
Chief Financial Officer Tammy Romo said that some of the routes out of Dallas have load factors over 90 percent and the new markets are maturing very quickly.
Overall, Kelly said the company had fuller planes with an 80.1 percent load factor for the quarter. The airline grew its capacity by 6 percent in the first quarter and carried 5.5 percent more passengers.
Low fuel costs also helped Southwest’s financial performance. The carrier said it paid an average of $2 per gallon of jet fuel compared to $3.08 per gallon in the first quarter of 2014. Fuel prices were down 35 percent, contributing over $450 million in fuel cost savings, Kelly said.
“I hope lower, stable, energy prices are here to stay,” Kelly said.
Excluding one-time accounting items, Southwest reported net income of 66 cents per share, beating Wall Street estimates of 55 cents. Shares of Southwest (ticker: LUV) rose 41 cents on Thursday, closing at $43.26.
With its record profits, Southwest announced it will pay out $126 million in profit-sharing to its employees for the quarter.
Southwest has added 2,000 full-time employees in the past year. Kelly said a vast majority of the increase has been flight attendants as the larger Boeing 737-800 needs an additional attendant on each flight.
The airline said it has 19 Boeing 737-800s and 17 Boeing 737-700s on order for 2015. However, the carrier has been converting its 737-700 aircraft orders into 737-800s so it can use the larger aircraft on longer routes.
Andrea Ahles, 817-390-7631