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Oct. 15--Southwest Airlines Co. said Thursday it lost $16 million in the three months ended Sept. 30 as special items on employee reductions and fuel hedging pushed it into the red.
Excluding those items, the Dallas-based carrier said it earned $23 million, and the company highlighted that number.
"To produce a profit, excluding special items, in this environment is a remarkable accomplishment," Southwest chairman, president and chief executive Gary Kelly said in the company's announcement.
"Sixty days ago, even a modest profit seemed unattainable," he said. "Despite the continuation of a depressed economy, our people fought hard, and have staged an impressive revenue recovery from where we were in June."
The results included $66 million for the costs of an early-out program in which 1,400 employees accepted an offer to leave the company, or $27 million net of taxes. Southwest said it paid out $32 million in the third quarter, with the remainder to be paid to employees who departed after Sept. 30.
"The company expects annual savings in subsequent years from the program to exceed the cost of the program," it said.
In addition, Southwest said it recorded a net loss of $12 million from costs related to fuel hedging.
Including special items, Southwest lost $16 million, or two cents a share, on revenues of $2.67 billion. A year earlier, the carrier lost $120 million, or 16 cents a share, on revenues of $2.89 billion.
The profit of three cents a share excluding special items beat the two-cent consensus estimate of industry analysts.
Analysts will be taking a close look at the revenue performance, as Southwest and the industry have seen their revenues drop precipitously from 2008.
In its report, Southwest said its average fare dropped 8.4 percent to $113.95, its total revenues were down 7.8 percent and the average passenger paid 12.94 cents per mile, down 12 percent from third quarter 2008.
However, unit revenue -- money brought in per seat mile flown -- was down only 2.2 percent to 10.76 cents. By comparison, its unit revenue fell 6 percent in the second quarter.
A July sale for post-Labor Day travel helped fill up more seats on Southwest flights, as Kelly noted.
"Favorable year-over-year load factor comparisons are continuing thus far in October 2009, with month-to-date passenger unit revenues up approximately one percent from the respective year-ago period," he said.
Kelly said "substantial cost pressures" in the third quarter will continue into the fourth quarter as the airline reduces its flying capacity by about 8 percent compared to fourth quarter 2008.
