For the third quarter, Southwest Airlines Company (LUV) posted profits.
For this no-frills airline company, profits were driven by experiencing diminishing fuel hedging impacts which allowed the adjusted earnings to exceed forecaster’s expectations.
For the most part, most major airlines have reduced capacity and offered fewer flights during this time of economic downturn. Primarily this is due to the increased cost of jet fuel. These strategies have been incorporated by most major airline industries in order to maintain profitability and endeavor to balance the income and expense sheet.
In a statement released by Chief Executive Gary Kelly, he indicated that Southwest’s financial performance for the third quarter, although not robust, was in keeping with the financial performance of competitive airlines. Southwest Airlines had anticipated more revenue growth than what was experienced and poor travel demand for the month of September was blamed.
Mr. Kelly continued to state that ticket sales for October were trending up and that at this point in time it appeared to be that travelers utilizing Southwest Airline’s service increased by 4% in comparison to October of last year. Added to the profit and expense sheet is the continued anticipated rise in aviation fuel. Mr. Kelly acknowledged that this expense is a continual reality and that steps will be taken in an effort to manage the costs more effectively.
For the quarter a profit of $16 million was reported. This equates to a value increase per share of stock by two cents. This $16 million figure is significant when compared to a year earlier, over the same time frame, which reflected a $140 million loss or per share, a loss of $.18.
Southwest Airlines is currently the largest airline passenger company that handles domestic travel.
For the airline passenger, the average traveler paid increase costs representing an upward swing of 1%. Total air travel by passengers fell by .6%. Reflecting the load factor, which is a measure of how many passengers are on a plane, a movement upwards to a level of 82.1% was reflected. This is an increase from the previous level of 82%.
Shares of Southwest Airline Stock closed at a level of $8.95 per share. Overall stock for Southwest Airlines has seen an increase of 4.6% for the current calendar year.
Additionally, Southwest Airlines is still committed in the long-term to expanding its service by offering more flights for its passengers, but is slowing down this process while the economy is still in recovery mode.
Furthermore, Southwest Airlines, a no-frills air carrier that offers its passengers the basics in airline travel, is beginning to explore the possibility of offering international flights to its customer’s.
