Southwest Expands at OIA Amid Skyrocketing Profits

Jan. 19--Low-cost carrier Southwest Airlines reported soaring profits on Wednesday and confirmed plans to expand to three newly constructed gates at Orlando International Airport by March.

At the same time, bankrupt Delta Air Lines prepared to vacate two-thirds of its 24 Orlando gates today, leaving Southwest as the leader in passenger market share and airline operating space in Orlando.

The new gates, which are expected to be completed by March, will bring Southwest's total to 12. Delta will hold on to eight gates after it officially leaves 16 today.

"Orlando is a great market for us; it's very strong in terms of a business and leisure destination," said Southwest spokeswoman Linda Rutherford. "Should Delta pull back and if that creates an expansion opportunity in Orlando, we'll definitely take a look at that."

Delta has said its flight schedule would not be dramatically impacted by the loss of gates, though the number of seats on its flights would likely drop about 6 percent as the airline redistributes its aircraft.

Airport officials are continuing to talk to Delta and are awaiting a court hearing in New York bankruptcy court to determine if the Atlanta-based airline can get out of its lease for those 16 gates. The hearing, originally scheduled for today, has been postponed while a new judge takes over the case.

Rutherford said the new Orlando gates would be incorporated into Southwest's schedule once the gates are completed.

Nationwide, the airline expects to pick up 8 percent in capacity this year by adding 33 planes to its fleet.

Southwest chief executive Gary Kelly said the airline would continue to focus on key growth markets including Denver, Chicago, Pittsburgh, Philadelphia and Florida, especially Fort Myers, where it recently added service for the first time.

"Our Florida markets have been a huge success story for us in the last decade," Kelly said, touting the airline's gaining dominance in the state.

Delta, once the official airline of Walt Disney World, has long been considered a leading carrier in the state, particularly in Orlando where its expansion in the early 1990s fueled the airport's growth.

But during 2005 Southwest began to overtake Delta in passenger market share in Orlando, though the margin remains slim. Southwest has also gained market share over Delta at Tampa International Airport, according to airport statistics.

Southwest said its fourth-quarter profit rose 54 percent despite a security fee assessed by the Transportation Security Administration, and that profits were up 75 percent for the year. The Dallas-based airline, the only major U.S. carrier to remain profitable since the 2001 terrorist attacks, said it plans to contest the $24 million in unexpected security expenses from TSA.

The year-end 2005 profit marked Southwest's 33rd consecutive annual profit, a record in the bruising airline industry.

Southwest officials gave little weight to any threat that might be brought on by start-up airline Virgin America, which is awaiting Federal Aviation Administration approval to begin service in some Southwest markets, including Orlando.

Kelly called starting an airline with crude oil hovering at about $65 a barrel an "enormous risk."

Southwest has kept its costs down by hedging about 85 percent of its fuel costs as soaring prices have devastated other airlines.

At the beginning of this year Southwest's hedging falls to 75 percent at a crude oil price of about $36 a barrel. The airline maintains some hedging protection through 2009.

Beth Kassab can be reached at bkassab@orlandosentinel.com or 407-420-5448.

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