Southwest Airlines on Thursday posted a higher-than-expected quarterly profit as it continued its record of successfully hedging against high fuel costs.
Other major US carriers, including United Airlines, American Airlines and Continental Airlines, recently reported quarterly losses amid the record fuel prices that have roiled the industry.
"Although our revenue trends are strong, energy prices continue to soar," said Southwest Chief Executive Gary Kelly. "Even with USD$511 million in favorable cash settlements from derivative contracts in the second quarter 2008, our economic fuel costs increased 35.2 percent," added Kelly.
Southwest, the leading US low-cost carrier, said second-quarter net income rose to USD$321 million, from USD$278 million a year earlier.
Quarterly revenue rose 11.1 percent to USD$2.9 billion.
Excluding fuel, second-quarter unit costs increased 1.8 percent from the year before.
Kelly said Southwest has derivative contracts for 80 percent of its third-quarter estimated fuel consumption, compared with 90 percent for the year-earlier period.
The current market value of Southwest's fuel derivative contracts for third quarter 2008 through 2012 is USD$4.3 billion.
"Southwest fitted the industry pattern so far of slightly beating projections," said Calyon Securities analyst Ray Neidl. But Neidl added: "They will be facing continuing cost pressures going forward."
Shares of Southwest fell about 3.3 percent to USD$15.36.
Kelly said Southwest has the flexibility to adjust its schedule to eliminate unproductive flights and the company plans to increase its year-over-year available seat mile (ASM) capacity no more than 4 percent in 2008.
Southwest is evaluating its current fleet plans and may not expand its ASM capacity in 2009, Kelly said.
(Reuters)
Other major US carriers, including United Airlines, American Airlines and Continental Airlines, recently reported quarterly losses amid the record fuel prices that have roiled the industry.
"Although our revenue trends are strong, energy prices continue to soar," said Southwest Chief Executive Gary Kelly. "Even with USD$511 million in favorable cash settlements from derivative contracts in the second quarter 2008, our economic fuel costs increased 35.2 percent," added Kelly.
Southwest, the leading US low-cost carrier, said second-quarter net income rose to USD$321 million, from USD$278 million a year earlier.
Quarterly revenue rose 11.1 percent to USD$2.9 billion.
Excluding fuel, second-quarter unit costs increased 1.8 percent from the year before.
Kelly said Southwest has derivative contracts for 80 percent of its third-quarter estimated fuel consumption, compared with 90 percent for the year-earlier period.
The current market value of Southwest's fuel derivative contracts for third quarter 2008 through 2012 is USD$4.3 billion.
"Southwest fitted the industry pattern so far of slightly beating projections," said Calyon Securities analyst Ray Neidl. But Neidl added: "They will be facing continuing cost pressures going forward."
Shares of Southwest fell about 3.3 percent to USD$15.36.
Kelly said Southwest has the flexibility to adjust its schedule to eliminate unproductive flights and the company plans to increase its year-over-year available seat mile (ASM) capacity no more than 4 percent in 2008.
Southwest is evaluating its current fleet plans and may not expand its ASM capacity in 2009, Kelly said.
(Reuters)