Southwest Airlines Co.'s earnings increased 31% in the June
quarter, topping analysts' views, as the airline continued to
benefit from lower fuel and operating costs.
Traffic during the quarter increased 7.9% and capacity rose 7%.
The portion of seats filled, or load factor, increased 0.7
percentage points.
"Our second quarter 2015 operating unit revenue performance was
impacted by challenging year-over-year comparisons, longer average
stage length, higher average seats per trip, and a softer yield
environment," said Chief Executive Gary C. Kelly.
The sharp drop 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.
Fuel savings were nearly $500 million, which led to a 12%
reduction in unit costs in the June quarter, the company said. Fuel
costs were $2.02 per gallon, compared with $3.02 per gallon the
year before. For the current quarter, the company expects fuel
costs of $2.20, down from $2.94 in the year-ago period.
However, Southwest's revenue per available seat mile, a key
measure of performance for the airline industry, fell 4.6% from a
year earlier, driven mostly by a decline in passenger revenue
yields.
Overall, Southwest reported a profit of $608 million, or 90
cents a share, up from $465 million, or 67 cents a share, a year
earlier. Excluding certain items, earnings were $1.03 a share, up
from 70 cents.
Revenue increased to to $5.11 billion from $5.01 billion a year
earlier.
Analysts polled by Thomson Reuters had called for earnings of
$1.02 a share on revenue of $5.14 billion.
Separately, Southwest said it plans to repurchase an additional
$500 million of common stock under an accelerated share repurchase
program soon. This would bring the total repurchases this year to
nearly $1.2 billion.
Write to Angela Chen at angela.chen@dowjones.com
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