More flights, more passengers and cheap jet fuel helped Southwest Airlines report a record first-quarter profit.
The Dallas-based carrier said net income grew 12.8 percent to $511 million while revenue increased 9.3 percent to $4.82 billion for the quarter.
“It is absolutely the best start we’ve had to a year in over two decades,” Southwest CEOGary Kelly told investors on a conference call Thursday.
Southwest added 9.2 percent to capacity in the quarter, enabling the airline to carry 7.9 percent more passengers with a load factor of 80.5 percent, up 0.4 percentage point from the first quarter of 2015. While there were more passengers, they paid less as the average fare dropped 2.7 percent to $153.75.
Kelly said the airline continues to have “outstanding performance” with the flights it has added at Dallas Love Field. Since October 2014 when the Wright Amendment flight restrictions expires, Southwest has expanded to 180 daily flights at Love Field. He added that the airline is seeing solid bookings for April.
Excluding one-time accounting items, Southwest reported income of $567 million, or 88 cents per share, beating Wall Street estimates of 84 cents per share, according to First Call.
“We expect the shares to react favorably to management’s bullish remarks about the demand environment and continued outperformance in unit revenue,” wrote Cowen & Co. analyst Helane Becker in a note to investors.
Shares of Southwest Airlines [ticker: LUV] rose 70 cents to close at $47.70 a share Thursday.
The carrier said it was boosted by a $125 million increase in revenue from a new co-branded credit card agreement with Chase Bank. Southwest expects an additional $125 million revenue benefit in the second quarter.
Southwest also announced it’s accelerating the retirement of its Boeing 737-300 fleet with all of the older aircraft leaving the fleet by 2017, a year earlier than previously announced. With the new plan, the airline said, it will have slower growth in 2017 as it will not be adding the new Boeing 737-MAX aircraft to its service until 2018.
During the first quarter, Southwest repurchased $500 million shares of its common stock. The company ended the quarter with $3.6 billion in cash and short-term investments.