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October 18, 2012

Southwest CEO: cutting costs but no layoffs, looking at new revenues but bags still fly free

Southwest Airlines plans to cut costs and look at new revenue opportunities in 2013 but chief executive Gary Kelly said that does not mean there will be layoffs or that it will end its "bags fly free" campaign.

During a conference call with Wall Street analysts, Kelly said the carrier is missing its strategic goals for the year and plans to reduce its corporate overhead costs by $100 million. Layoffs, however, are not being considered at this point.

"[Layoffs] are always an option for a company, but to be clear, no. That is not what I'm contemplating at this point," Kelly said. "We may sharply curtail our hiring and our total employment in corporate...may begin to fall as we have voluntary turnover within the company."

Revenues, which were flat for the quarter compared to last year, are also being examined, Kelly said. The company plans on looking at new revenue initiatives but Kelly did not go into detail if there may be new passenger fees at Southwest.

When asked if Southwest may consider checked bag fees, Kelly responded, "for now, of course not." Kelly added, "at this point, we're simply on a mission to see if we can come up with some ideas that we like that we think will be effective that will enhance the brand and it's just premature to say anything more than that."

-Andrea Ahles

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