Southwest Airlines posts first quarterly loss in 17 years
17 Oct 2008
The most successful name in airline history, Southwest Airlines, reported its first quarterly loss in 17 years with tumbling fuel prices in the third quarter forcing the company to cut the value of its legendary fuel-hedging programme.
The low fare carrier reported a net loss of $120 million, compared with year-earlier net income of $162 million. Revenue was up 12 per cent to $2.9 billion, which bettered market expectations of a revenue of $2.83 billion.
Southwest, the biggest US carrier by domestic traffic, said third-quarter fuel costs jumped 44% to $2.44 a gallon, which is still well below that of fellow carriers. The carrier said it had hedged 85% of its fourth-quarter fuel requirements at the equivalent of $62 a barrel for crude oil.
Revenue passenger miles, or one paying passenger flown one mile, was down 4.4%, as capacity rose 2.2%. Load factor declined 5% to 71.6%, from 76.6%. Revenue per available seat mile was up 9.3%.
Southwest said it will cut 190 flights, and add six, when it commences its winter schedule on 11 January. This will reduce capacity by about 5-6% in its daily schedule.
