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July 29--Southwest Airlines Co. earned $112 million in the second quarter, compared to $91 million in net income a year earlier, as it rode strong revenue growth to higher profits.
The profit meant that eight of the nine largest U.S. carriers posted a profit in the second quarter, with only American Airlines Inc. parent AMR Corp. reporting a $10.7 million loss.
As a group, the nine carriers earned nearly $1.5 billion in the three months ended June 30. That's an encouraging turnaround from second quarter 2009 when the same airlines collectively lost $555 million.
Southwest chairman, president and chief executive officer Gary Kelly credited record revenues for pushing the airline to increased earnings.
"Although business demand has not fully recovered, it has strengthened, and consumer travel demand is robust," Kelly said.
The carrier earned 15 cents a share on revenues of $3.17 billion, compared to 12 cents a share on revenues of $2.62 billion in second quarter 2009.
Southwest's results were dampened by the negative impact of fuel hedging accounting. Excluding special items, the carrier earned $216 million, or 29 cents a share, above analysts' consensus of 27 cents a share.
Kelly said Southwest may set a record for load factor, or percentage of airplane seats filled, in .July. That would best its previous monthly record, 83.2 percent, set last July
"We have built considerable, industry-leading revenue momentum that began in second half 2009," Kelly said. "We see no signs that the momentum will stall in second half 2010. Based on traffic and revenue trends to date, we expect strong year-over-year unit revenue growth in third quarter 2010."
Southwest's best quarter ever came in 2006 when the Dallas-based carrier put up profits of $333 million. As recently as second quarter 2008, Southwest reported net income of $321 million.
But it lost money in four of the next five quarters. Only a strong fourth quarter kept Southwest from reporting its first annual loss since 1972, its second year of existence.
With the most recent results, Southwest has now made money in three straight quarters.
