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July 19, 2012

Southwest posts $228 million second-quarter profit

Despite losses on its fuel hedging portfolio, Southwest Airlines posted a $228 million profit for the second quarter.

The Dallas-based carrier said net income increased 42 percent over the second quarter of 2011. Revenues grew 11.6 percent to $4.6 billion.

"We are producing very strong results despite a fragile economic environment," Southwest chief executive Gary Kelly said in a statement.

Part of the revenue growth came from increasing fares as Southwest's average fare rose to $150, up 5 percent compared to the second quarter last year. Passenger traffic during the quarter grew 5.1 percent as capacity also increased 5.6 percent.

Southwest said its unit revenues - a measure that tracks how much money an airline collects for every seat-mile flown - grew 6.0 percent in the quarter.

The carrier's second quarter results included a net $38 million accounting charge related to its fuel hedging contracts and $7 million in expenses related to its integration of AirTran Airways, which it purchased in May 2011. Excluding these one-time accounting items, Southwest said its net income was $273 million, or 36 cents per share, beating Wall Street analysts' estimates of 33 cents per share.

The carrier ended the quarter with a cash and short-term investments balance of $3.3 billion and said it has completed half of its repurchase of $1 billion in company stock.

In the second quarter, Southwest announced it was deferring delivery of Boeing aircraft and transferring its fleet of Boeing 717s to Delta Air Lines.

"Given that we don't plan to grow the fleet until we hit our financial targets, deferring 30 new aircraft deliveries will reduce our 2012 to 2014 capital spending by approximately $1 billion," Kelly said.

Southwest executives were to discuss the company's earnings results on a conference call at 11:30 a.m.

-Andrea Ahles




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Don Abbott

Less than 30 months until non-stops to California, New York, Florida, Illinois from Love Field.


Good job Southwest. Accomplished this with no baggage fees or other BS. If you need some larger acft for International service, I hear there is some in Fort Worth for sale. Southwest American Airlines. Hmmm, has a nice ring to it.


SWA should buy American Air !!


I find it fascinating that SWA can gain profits while being a customer service company. No fees, no BS, you get grade A service, I think that it is about time that other airlines pattern themselves after SWA. It is amazing how much they have gained, and how much AA has lost.


That's impressive. Their model is very different from the legacy airlines (one fleet type is a huge factor).

It's too bad they destroyed their frequent flier program.

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