Southwest Airlines has stated that, based on current booking and revenue trends, the carrier continues to expect its first quarter 2016 operating revenue per ASM (RASM) to be in line with first quarter 2015.
Based on current cost trends and excluding fuel and oil expense, special items, and profitsharing expense, the company expects its first quarter 2016 unit costs to increase in the one to two percent range, and its annual 2016 unit costs to increase approximately one percent, as compared with the same periods last year. This unit cost guidance includes the impact of the recently ratified collective bargaining agreements with the Company's Ramp, Operations, Provisioning, and Cargo Agents, and its Flight Instructors.
Based on the Company’s fuel derivative contracts and market prices as of March 1, 2016, first quarter 2016 economic fuel costs are estimated to be approximately $1.75 per gallon, compared with first quarter 2015’s $2.00 per gallon, and annual 2016 economic fuel costs per gallon are estimated to be in the $1.80 to $1.85 range. The Company currently estimates annual fuel cost savings of more than $300 million, compared with annual 2015.
The Company continues to expect its full year 2016 available seat miles (capacity) to increase in the five to six percent range, year-over-year. The annualized impact of the Company's 2015 expansion is expected to contribute the majority of 2016's year-over-year capacity growth.
The Company continues to plan for modest year-over-year fleet growth through 2018 of no more than two percent, on average.
The Company currently estimates its 2016 capital expenditures will be approximately $2.0 billion. The Company’s aircraft capital expenditures for 2016 are still estimated to fall in the $1.3 billion to $1.4 billion range.
Southwest has also announced that, thus far in 2016, the Company has returned $549 million to its Shareholders through $49 million in dividend payments in January, and the repurchase of $500 million in common stock pursuant to an accelerated share repurchase (ASR) program executed on January 25, 2016 (“First Quarter 2016 ASR Program”). The Company received an initial delivery of shares, representing an estimated 75 percent of the shares expected to be purchased by the Company under the First Quarter 2016 ASR program.
The specific number of shares that the Company ultimately will repurchase under the First Quarter 2016 ASR Program will be determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period to be completed no later than April 2016. The Company has $200 million remaining under its existing $1.5 billion share repurchase program.