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Tidbits from the Southwest Q2 earnings call

Southwest Airlines CEO Gary Kelly says its capacity at Dallas Love Field has grown 150 percent. Special/Brandon Wade
Southwest Airlines CEO Gary Kelly says its capacity at Dallas Love Field has grown 150 percent. Special/Brandon Wade Star-Telegram

Southwest chief executive Gary Kelly told investors that there was “a softer economy than we were planning for” in the second quarter.

Although passengers took longer trips on the Dallas-based airline, the average fare per passenger was down, Kelly said during a conference call with investors on Thursday.

“Average fares are actually down year-over-year. There is a very competitive industry and some of that is, of course, a function of us adding capacity in new markets which are underdevelopment,” Kelly said.

Here are a few other tidbits from the conference call.

On the lawsuits related to Delta Air Lines wanting gate space at Dallas Love Field

“To accommodate the court and its desire to maintain the status quo, we have extended, the term is a license, to Delta to continue to operate their 5 daily departures,” Kelly said. “It will be difficult because there is no room at those gates. If we do find there is room, we want that room. We all know there is scarce capacity at Dallas Love Field. We will work hard to support the court in their review of what is a complex issue...We don’t see it as complicated but we’ve been dealing with it for 34 years.”

On the performance of its new routes at Love Field

“They are about 94 percent [load factor],” Kelly said. “They are very full and very, very popular and our folks are working hard at Love Field. We are very pleased with the results.” He noted that the airline has added 60 daily departures and capacity is up 150 percent in the first year after the Wright Amendment restrictions expired. “In Dallas, we’ve lowered fares. We’ve added flights and stimulated demand. We have created meaningful competition for the first time in decades,” Kelly said.”

On the Justice Department’s investigation into U.S. airlines on possible collusion

“We’re cooperating by doing what they told us to do. We’re good at supplying information and we know how to do that and we’re busy complying with that request,” Kelly said. “There has been a lot of talk by some and we don’ want to continue to perpetuate that. You’d have to ask the DOJ what actually spawned their desire to investigate, but we’re fully compliant. We comply with all the anti-trust laws and we comply with all laws for that matter.”

On the construction of its new international terminal at Houston Hobby airport

“We are constructing a five-gate terminal. That construction is right on schedule. It has been a fantastic project and we’re obviously looking forward to launching service,” Kelly said, noting that it will initially fly to Belize in October and then add flights to Costa Rica in November. “It’s very exciting for us. I think the potential of the terminal is roughly 25 daily departures and we’re starting out much more modestly than that.”

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