Southwest Airlines' profit up 18%, to 29 cents a share

East Coast upturn a major contributor

Airlines

July 21, 1999|By BLOOMBERG NEWS

DALLAS -- Southwest Airlines Co., the world's biggest low-fare airline and the dominant carrier at Baltimore-Washington International Airport, said yesterday that second-quarter earnings rose 18 percent because of increased passenger demand along the East Coast.

Net income climbed to $157.8 million, or 29 cents a split-adjusted share, from $133.4 million, or 25 cents, in the second quarter of last year. The most recent per-share results were in line with the average estimate of 30 cents from analysts surveyed by First Call Corp. Revenue rose 13 percent to $1.22 billion.

Southwest flies only in the United States, and economic growth contributed to a 15 percent increase in the carrier's second-quarter passenger traffic. That helped the Dallas-based carrier overcome rising costs for jet fuel during the quarter because of refinery problems on the West Coast, analysts said.

"Their average fuel price was higher than it otherwise would have been," said Warburg Dillon Read analyst John Pincavage, who rates Southwest a "buy." "There were particular problems with refineries in Los Angeles during the quarter. Everything else looked in line with expectations."

Southwest said it had "strong customer response" to its expansion into Raleigh-Durham, N.C., and Long Island, New York. It plans to add service to Hartford, Conn., in October.

About 12 percent of Southwest's daily departures now are considered long-haul, or more than two hours, Kelly said. The longer flights have introduced some leisure travelers to Southwest's business travel flights, and helped keep costs down, he said. The average length of a flight is up 7 percent this year.

Southwest shares, up 38 percent this year, slid $1.5625 to $20.375 yesterday.

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