Southwest Posts Strong Results Despite High Fuel Costs

By Frank Yu
Frank Yu
Frank Yu
January 19, 2012 Updated: January 19, 2012

Southwest Airlines Co., the nation’s leading discount carrier, on Thursday reported a $152 million quarterly profit—a 16 percent increase—in the fourth quarter, despite higher fuel costs.

Revenues increased to $4.1 billion for the Dallas-based company, which carries more passengers in the United States than any other airline. The increased revenues were due to fuller planes and higher fares in recent months.

The airline is the first in the industry to report last quarter’s results, which could bode well for the industry. Analysts are expecting strong results given the passenger volume during the 2011 holiday travel season.

Offsetting the revenue is higher fuel costs, as Southwest disclosed that fuel costs were 34 percent higher than a year earlier. The company doesn’t expect a decline any time soon given current geopolitical unrest in the Middle East.

The airline is still digesting its acquisition of AirTran Airways, which it bought last year for $1.4 billion, boosting its revenues and expanding its presence in the U.S. Southeast.

“During 2012, we will take delivery of 33 737-800s, with the first delivery of the -800 model to Southwest scheduled for March,” said CEO Gary Kelly in a statement. The company’s fleet modernization program is expected to generate fuel savings over its existing fleet.

Delta Airlines Inc., U.S. Airways Group Inc., and United Continental Holdings all report results next week.

Frank Yu