Southwest Airlines reports first quarter results

Southwest Airlines has reported a record first quarter operating revenues of $4.1 billion, with a net income of $59 million and operating income of $70 million. Excluding special items, net income was $53 million; operating income of $112 million
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated: "The significant year-over-year improvement in our first quarter results (excluding special items) was driven by record first quarter revenues and a better-than-expected cost performance. On relatively flat available seat miles year-over-year, total operating revenues of $4.1 billion increased 2.3%, or 1.8% on a unit basis, compared to first quarter last year. Passenger revenues were boosted significantly by continued progress on the AirTran integration, fleet modernization efforts, and the Rapid Rewards loyalty program. Year-over-year passenger unit revenue trends were relatively stable through February, and while worse than expected, March passenger unit revenues outperformed the domestic industry, on a capacity adjusted basis. Soft revenue trends have continued, thus far, in April, and we expect a year-over-year decline in our April passenger unit revenues. While we are cautious about April trends and the potential effects from government sequestration, recent bookings for May and June have been solid, and lower fuel prices have roughly offset the revenue weakness thus far in April.”
"Based on market prices as of April 22nd, second quarter 2013 economic fuel costs, including fuel taxes, are expected to be in the $3.00 to $3.05 per gallon range, well below second quarter 2012's $3.22 per gallon, including fuel taxes, and below the original forecast included in our 2013 plan1. Also, we now have derivative contracts in place for the remainder of the year that support estimated fuel costs per gallon below our 2013 plan. First quarter 2013 economic fuel costs were $3.29 per gallon, which was in line with our expectation, and 4.4 percent lower than first quarter 2012's all-time high $3.44 per gallon.
"We are pleased with the early results from revenue initiatives implemented in first quarter 2013 and are excited about the incremental benefit expected for future periods. We launched some of our new 2013 ancillary revenue streams, including selling open premium boarding positions at the gate, increasing our EarlyBird Check-In™ charge, and increasing certain other fees.
During the period, Southwest took delivery of nine new Boeing 737-800s and two used Boeing 737-700s, retired three older Boeing 737-300s and one Boeing 737-500, and retrofitted more -700s with its new Evolve interior.
Southwest has $3.1 billion in cash and short-term investments at March 31, 2013. Earlier this month, the airline replaced its $800 million revolving credit facility with a new $1 billion five-year revolving credit facility. The $200 million increase enhances the airline’s liquidity and financial flexibility.