The downward spiral of SSS’ favorite airline continues as the fallout from kicking Billie Joe Armstrong off a flight in 2011 for wearing saggy pants continues. I understand the CEO of Southwest has checked into the same rehabilitation center as Billie Joe, as they both try to regain their former stature. This was SSS’ reaction when told of the 49% drop in Southwest profits:
Southwest Airlines 4th-quarter profit falls 49%
By Tess Stynes
Southwest Airlines Co.’s (NYSE:LUV) fourth-quarter earnings fell 49% as the company booked lower fuel-hedging gains, higher operating expenses and a decline in passenger traffic.
The largest carrier of domestic U.S. passengers is being retooled from its roots as a pioneer discount airline, enlarged by the acquisition of AirTran Airways and with more connecting flights, in addition to plans for international service.
Chairman and Chief Executive Gary Kelly on Thursday said Southwest is on track with its plan to fully integrate AirTran by the end of next year.
The airline in October outlined plans that it hoped would halt the growth in costs by mid-2013, alongside more efforts to boost revenue despite a weak economic outlook that has encouraged airlines to launch fare sales during the fall.
Southwest on Thursday said that it expects passenger unit revenue growth of 2% to 3% for January.
“As we enter 2013, bookings and revenue trends, thus far, suggest a year-over-year improvement in January 2013 passenger unit revenues in the two to three percent range,” said Chairman and Chief Executive Gary Kelly. “While the effect of U.S. tax increases on the domestic economy remains uncertain, bookings for the remainder of first quarter, thus far, are strong.”
Southwest reported a profit of $78 million, or 11 cents a share, down from $152 million, or 20 cents a share, a year earlier. Excluding fuel-hedging impacts, integration-related charges and other items, adjusted earnings were unchanged at nine cents. Revenue increased 1.6% to $4.17 billion as freight revenue growth offset declines in passenger revenue and other revenue.
Analysts polled by Thomson Reuters most recently projected earnings of eight cents on revenue of $4.21 billion.
Operating expenses were up 3.1%.
Average passenger revenue per available seat mile declined 2%. Traffic declined 1.4%, while capacity eased 0.3%. Load factor, a measure of plane fullness, fell to 79.6% from 80.5%.
Shares closed Wednesday at $11.36 and were inactive premarket.
MAYBE THIS WILL CHEER SSS UP:
Eddie says:
Airlines can’t find a business model that is compatible with Peak Oil. The math must be real hard.
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24th January 2013 at 8:27 am
Bostonbob says:
Eddie you are spot on I have a hard time convincing anyone I know that this is coming to an ugly end. Here is another article about how we will be energy independent. Ironically if there is a true collapse there may be more than enough oil for the few that can afford it.
http://thediplomat.com/2013/01/23/america-the-worlds-new-petrostate/
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24th January 2013 at 8:48 am
majormocambo says:
Bostonbob, the author of that article, Anthony Fensom, only knows what he reads from the energy optimists. Fracking for oil is not our savior in any sense. You have to drill faster each year just to stay equal. That’s not good. The arctic oil is 15 years away from meaningful production (if they can do it at all), at which point Saudia Arabia will be an importer. The ugly end is getting closer. Buckle-up.
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24th January 2013 at 10:40 am
Olga says:
…. and a decline in passenger traffic.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Can’t believe they didn’t see that coming. From a mile away.
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24th January 2013 at 11:09 am
Hope@ZeroKelvin says:
Uh oh, this article makes me worry about my 545,000 points in my SW Awards Program.
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24th January 2013 at 11:23 am
Davossherman says:
I get up everyday and say how much I miss the airlines. “God, thank you.”
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24th January 2013 at 11:35 am
ecliptix543 says:
After working in that industry for over a decade, here’s my professional opinion: THEY ARE FUCKED!
It’s a dead business model. We have the aforementioned issue of rising fuel costs. That alone would be enough to kill the airlines off. Then we have those wonderful, upstanding citizens of the TSA, which also are likely capable of destroying most any business just by showing up to collect their paychecks and steal shit. We also have the somewhat less obvious complete and total lack of up-and-coming engineers who are actually smart enough to think up something as complicated as a wing, let alone an entire airplane. Then we have the perpetually increasing laziness and aversion to working shitty hours as is required for maintenance personnel. We also have the flight crews being worked to death for bottom-rung pay. Outsourced (several layers of it in some cases) responsibility for inspections and safety issues. The FAA on the take until enough people die that the enemy lawyers get involved…
They’re toast. I have other reasons that are more specific to particular operators or aircraft types, but suffice it to say, it’s over. I got out a few years ago as the bullshit/paycheck ratio surpassed acceptable levels. It used to be fun to work with airplanes and the types of people that are drawn to them. I have lots of great memories and more than a few good stories but, as is so often the case, the government absolutely ruined it. All of it. Just like they fuck up every other damn thing they touch.
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24th January 2013 at 5:01 pm
AWD says:
I wonder if the TSA has anything to do with it
Fuck the airlines for allowing this molestation to continue
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24th January 2013 at 5:21 pm
SSS says:
AWD says: “I wonder if the TSA has anything to do with it. Fuck the airlines for allowing this molestation to continue.”
TSA is a monster built, funded, and manned by the federal government after 9/11. The airlines had NOTHING to do with the existence of TSA. Nor do they have anything to do with how TSA screens (molests) passengers. Period.
The fact that AWD got 3 thumbs-up for this dipshit comment does not speak well for the mental acuity of, well, 3 visitors to this board. The fact that he got 1 thumbs-down speaks well for the mental acuity of ……… me.
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24th January 2013 at 11:26 pm
SSS says:
Here we go again with one of Admin’s anti-capitalist rants against one of America’s most successful and spectacular businesses. And just like clockwork, the lemmings follow him off the cliff.
“Southwest’s 4th quarter profits fell 49%” screams Admin’s posted article. Well, damn Sam, you could knock me over with a fucking feather. Profits jump and fall in one of America’s most volatile industries. Jesus Christ, who knew?
Southwest is the BEST airline in America today. It employs 37,000 people and is the largest purchaser of Boeing 737 aircraft. It is kicking in $100 million to upgrade Hobby airport in Houston for international flights. Stop and think about all of the private industry jobs that adds up to, and these are just a few examples.
Oh, and it has NEVER lost a passenger. Never. So let’s just say Southwest is a piece of shit and be done with it.
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24th January 2013 at 11:54 pm
sangell says:
SSS,
I stopped rooting for airlines when Howard Hughes, in perhaps his last moment of lucidity, sold TWA for $566 million dollars. I’ve heard it was the largest check ever written to an individual at that time.
I really liked TWA even after Hughes sold it. They had non stop L-1011s from SF to DC and bars on the planes. If ypu were smart, you undid your seat belt, went to the bar and sat first class for the rest of your flight.
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24th January 2013 at 12:48 am