Southwest Reports Decline in 4Q Earnings
Wednesday, January 19th 2005, 11:04 am
By: News On 6
DALLAS (AP) _ Southwest Airlines Co. reported a decline in fourth quarter earnings Wednesday and predicted continued profitability in early 2005.
The Dallas-based airline said it earned $56 million, or 7 cents per share, despite higher fuel prices and continuing fare wars that are sapping revenues of major carriers.
Analysts surveyed by Thomson First Call had expected profit of 8 cents per share, which would have matched Southwest's mark from a year earlier, when it earned $66 million.
Revenue rose 9 percent, to $1.66 billion from $1.52 billion in the October-December period of 2003. That was slightly below analysts' prediction of $1.68 billion.
Southwest said it saved $174 million during the fourth quarter by hedging, or buying fuel in advance under long-term contracts. Still, it said fuel costs per gallon jumped 20.1 percent. Other costs declined 4.5 percent per mile flown by each passenger, the company said.
The airline said traffic, measured in miles flown by passengers, rose 12.6 percent, enough to overcome a 10.5 increase in capacity. As a result, Southwest's planes flew slightly fuller than they did a year earlier.
For all of 2004, the company earned $313 million, or 38 cents per share. That compared to $298 million, or 36 cents per share, in 2003, excluding a government grant to cover security costs. Including the grant, the airline earned $442 million or 54 cents per share in 2003. Annual revenue rose to $6.53 billion from $5.94 billion in 2003.
Chief executive Gary C. Kelly said earning revenue continued to be a challenge because of a glut of airline seats, a situation that will persist into this year. He said the airline has locked in 85 percent of its first-quarter fuel purchases at the equivalent of $26 per barrel oil.