At its annual shareholder meeting on Wednesday, Southwest Airlines announced it has increased its quarterly dividend to 4 cents per share, up from a penny.
The board of directors increased the carrier's share repurchase authorization from $1 billion to $1.5 billion. Since Southwest began buying back its stock in 2011 the company has repurchased $725 million in shares, reducing its outstanding shares by 10 percent, said Southwest chief executive Gary Kelly.
Southwest also announced it is restructuring its aircraft purchase contract with Boeing, deferring several options until after 2019 when it can get the Boeing 737MAX-7 aircraft.
The Dallas-based carrier has converted five Boeing 737-700 firm order into 737-800s, exercised five options for 737-800s and relinquished five purchase options in 2014. It has also relinquished five purchase options in 2015.
Southwest has agreed to buy ten pre-owned Boeing 737-700s for delivery in 2014 and 2015 and has deferred 41 737 next-generation aircraft options from 2014 to 2018 and converted them into 737MAX options to beyond 2024. An additional 20 Boeing 737 next-generation firm orders in 2017 and 2018 were converted into 737MAX firm orders in 2019 through 2021.
Kelly said the changes will save the carrier more than $500 million in capital spending for firm orders over the next five years and has pushed $2 billion in optional aircraft spending beyond 2017.
"We believe we have ample opportunities to maintain our fleet and also to grow our in service fleet in 2015 and beyond should the right opportunities arise," Kelly said.