By Doug Cameron Of DOW JONES NEWSWIRES The head of Southwest Airlines Co. (LUV) said Wednesday that bookings remained strong and there were no plans to drop its dividend despite the impact of rising jet fuel costs. Gary Kelly, chairman and chief executive, said at the company's annual meeting in Dallas that May and June bookings were "very strong," retaining his optimistic outlook about demand trends. Southwest has led most of an unprecedented number of fare increases across the U.S. domestic airline industry this year, keeping capacity broadly flat as it digests the prospect of a 2011 fuel bill that Kelly said would be "at least" $1.3 billion higher than last year. The forecast is down from its last estimate for a $1.5 billion rise, reflecting the recent dip in oil prices. Kelly said in response to a shareholder question on dividend policy that Southwest had no plans to drop its payout, but any raise would have to wait until it hit its long-term target of a 15% return on equity. He conceded that its new frequent-flyer program had suffered "hiccups," but was running ahead of plan in terms of most key metrics. Southwest shares were recently down 0.2% at $12.19 as the sector slid in the wake of another bump in oil prices. American Airlines' parent AMR Corp. (AMR) traditionally holds its annual meeting on the same day as Southwest, though did not webcast today's event in Los Angeles. -By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com
