DALLAS , April 16 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV) today reported a first quarter 2009 net loss of
First Quarter 2009 Financial Highlights:
Gary C. Kelly , CEO, stated: "Our first quarter 2009 financial results are disappointing, but not surprising given the current economic environment. We face the toughest revenue environment in our history. A rapid weakening in passenger demand during first quarter, particularly among business travelers, led to our first quarter net loss. Although competitively strong and financially resilient, we are not immune to the challenges the worldwide recession is having on air travel.
"Still, I am very proud of the efforts of our People. Our operations and Customer Service delivery continues to be outstanding. Our revenue trends continue to outperform our U.S. competitors. These revenue results demonstrate the strength of our Low Fare brand, the benefits of our aggressive flight schedule optimization, and the effectiveness of our Marketing and Revenue Management efforts.
"We have acted to reduce our spending, but also maintain our intense focus on previously announced initiatives to grow revenues. We plan to follow through with the investment in and construction of these strategic revenue initiatives that we believe are vital to our future. However, overall, we have significantly reduced planned capital spending by approximately
"Our recent promotions and discounting activities have been successful in stimulating traffic. Our first quarter 2009 load factor of 69.9 percent was a record first quarter performance, despite the impact of Easter shifting to April this year versus March last year. We continue to enhance our strong brand, Customer Experience, and traffic through our No Hidden Fees campaign. However, yields were down 2.8 percent from a year ago, resulting in a unit revenue decline of 2.9 percent. Although our April results should benefit from the timing of the Easter holiday, we currently expect another year-over-year decline in our second quarter 2009 operating unit revenues, based on revenue and booking trends thus far.
"We benefited from significantly lower year-over-year economic jet fuel costs in first quarter 2009. Even with
The Company has derivative contracts in place for approximately 50 percent of its second quarter 2009 estimated fuel consumption, capped at a weighted average crude-equivalent price of approximately
Gary Kelly stated, "Our plans to reduce staffing via our voluntary early-out program will help mitigate cost pressures next year. Our first quarter 2009 unit costs, excluding fuel, increased 8.4 percent over last year, which was in line with our expectations. We were very pleased to have reached tentative agreements with our Flight Attendants and Pilots during the quarter. In addition, our Ramp, Operations, Provisioning, and Freight Agents and our Mechanics voted to ratify their tentative agreements. These Employees demonstrated their commitment to maintain Southwest's competitive position while enabling the Company to sustain its financial strength in an increasingly tough economy. Based on these agreements and current cost trends, we expect our second quarter 2009 unit costs, excluding fuel, to be in line with first quarter 2009.
"Presently, we still plan to accept 13 new Boeing 737-700s in 2009, and retire 15 aircraft by the end of the year. Through continued focus on maximizing the efficiency and profitability of each published flight schedule, we have the ability to grow in exciting new and developing markets, such as Denver , Minneapolis-St. Paul , New York LaGuardia, and Boston Logan, while reducing our available seat miles, currently estimated to decline in the five percent range versus 2008."
The Company previously announced its service from New York LaGuardia airport to begin with five flights to Chicago Midway and three flights to Baltimore/Washington on June 28, 2009 ; and its Boston Logan service to begin on August 16, 2009 with five flights to both Chicago Midway and Baltimore/Washington.
For the thirteenth year in a row, Fortune magazine recognized Southwest Airlines in its annual survey of corporate reputations. Among all industries, Southwest Airlines was named the seventh most admired Company in the World, making it the only U.S. airline to make the list of the World's Top 50 Most Admired Companies. Institutional Investor magazine once again named Southwest Airlines as America's Most Shareholder-Friendly Airline in its survey of investors and analysts. Finally, Southwest Airlines Cargo was recently named "Airline of the Year" by the Express Delivery & Logistics Association, for the fifth consecutive year in a row, honoring its excellence in air cargo delivery service.
Southwest will discuss its first quarter 2009 results on a conference call at 11:30 a.m. Eastern Time today. A live broadcast of the conference call will be available at http://www.southwest.com/?src=INVRINVQ109000000090416.
Total operating revenues for first quarter 2009 decreased 6.8 percent to
"Other expenses" were
The first quarter 2009 tax rate was impacted by the Company's current projections for financial results for the year and the related impact that permanent tax differences have on these projections. The first quarter 2008 income tax rate of approximately 9 percent was primarily the result of a decrease in deferred tax liabilities of approximately
Net cash provided by operations for first quarter 2009 was
In its continued effort to structure counterparty agreements to minimize liquidity exposure, the Company replaced an existing fuel hedging agreement with a major fuel hedge counterparty, effective April 8, 2009 . Previously, Southwest became obligated to post cash or letters of credit as security to this counterparty upon a noninvestment grade credit rating. Under the new agreement, the Company posts cash as collateral for obligations in amounts of up to
During the first quarter 2009, the Company closed on the second five aircraft tranche of the sale and leaseback transaction entered into at the end of 2008 for ten of the Company's Boeing 737-700 aircraft. Including the
Following first quarter 2009, the Company executed and closed the first tranche of what is expected to be a two tranche sale and leaseback transaction for six of the Company's Boeing 737-700 aircraft. The first three aircraft tranche closed on April 2, 2009 for approximately
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements relating to (i) the Company's strategic initiatives and related expectations, (ii) its growth plans and expectations, and (iii) its expectations regarding future results of operations. These forward-looking statements are based on the Company's current intent, expectations, and projections and are not guarantees of future performance. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) continued unfavorable economic conditions, which could continue to impact the demand for air travel and the Company's ability to adjust fares; (ii) the price and availability of aircraft fuel and any changes to the Company's fuel hedging strategies and positions; (iii) the Company's ability to timely and effectively prioritize its revenue and cost reduction initiatives and its related ability to timely implement, transition, and maintain the necessary information technology systems and infrastructure to support these initiatives; (iv) competitor capacity and load factors; and (v) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 .
SOURCE Southwest Airlines