Southwest Airlines Co.'s earnings more than doubled in the first
quarter, as customer demand led to a record-high load factor and
the airline continued to benefit from lower fuel prices.
Shares were up about 1.4% in premarket trading Thursday.
Traffic during the quarter increased 7.1% and capacity rose 6%.
The portion of seats filled, or load factor, grew to a record 80.1%
from 79.3%.
The sharp drop-off in oil prices has been generally favorable to
airlines. Though some airlines are less affected due to agreements
called fuel hedges, Southwest is exposed to 80% of the fall in oil
prices.
For the company, this means that first-quarter unit costs were
at $2.01 a gallon including fuel tax, down from $3.10 a year
earlier. For the current quarter, Southwest sees fuel costs at
about $2 a gallon. The latest quarter included $19 million in
mark-to-market losses from fuel hedges.
Total unit costs were down 12%. For the current quarter,
Southwest expects unit costs to fall 1% to 2%. Total operating
expenses fell 8%.
The company is planning to increase its fleet about 2% in 2016
and is on track to add six international destinations.
Overall, Southwest reported a profit of $453 million, or 66
cents a share, up from $152 million, or 22 cents a share, a year
earlier.
Revenue grew 6% to $4.41 billion.
Analysts polled by Thomson Reuters had called for earnings of 65
cents a share on revenue of $4.42 billion.
Southwest's revenue per available seat mile, a key measure of
performance for the airline industry, edged up 0.3% from a year
earlier.
Write to Angela Chen at angela.chen@dowjones.com
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