Southwest Airlines today reported a first quarter 2010 net income of $11 million compared to a net loss of $91 million for first quarter 2009.
"Just to have a profit is a very significant accomplishment," CEO Gary Kelly told analysts yesterday. He said over the long term the LCC has "tremendous growth opportunities" but noted, "We haven't met our return on capital target in a decade and that's just not acceptable to us. We're going to err on the side of caution."
Following the collapse of SWA's codeshare pact with WestJet, Kelly said the carrier is focusing on implementing its codeshare deal with Mexico's Volaris this year and is "open" to another codeshare partnership for flights beyond the continental US but is not actively seeking one.
International service remains on SWA's radar screen, but Kelly remained noncommittal on when it might occur. "We're retooling Southwest so that ultimately international destinations become a tactical decision rather than a strategic move," he explained. Flights outside the US are "coming," he said. "We'll get there eventually. . .Right now we're very happy to concentrate on Mexico and Volaris."
First-quarter revenue rose 11.6% to $2.63 billion while expenses increased 7% to $2.58 billion, producing operating income of $54 million, reversed from an operating deficit of $50 million last year. Traffic rose 1.6% to 17.16 billion RPMs on a 6.4% cut in capacity to 22.62 billion ASMs, producing a 75.9% load factor, up 6 points. Passenger yield lifted 9.1% to 14.54 cents as RASM jumped 19.3% to 11.63 cents and CASM heightened 14.4% to 11.39 cents. CASM ex-fuel increased 9.8% to 7.76 cents.
Looking ahead, Kelly said positive trends "are strengthening still" in the current quarter, adding, "We expect another significant year-over-year unit revenue gain in the second quarter."
Operationally, our People continued to deliver outstanding levels of Customer Service, despite severe weather resulting in significant cancellations during first quarter 2010. "I am very grateful to all of our 35,000 hard-working and resilient Employees for their tremendous efforts. It is because of their unwavering Warrior Spirits that Southwest Airlines continues to lead the industry and be recognized for excellence.”
