Southwest predicts another year in black

Discount airline holds jovial annual meeting

May 16, 2002|By KNIGHT RIDDER/TRIBUNE

DALLAS - The mood was jovial for Southwest Airlines Co. investors yesterday as the airline predicted another year in the black.

"I would expect that we will be profitable for the year," Chief Executive Officer James F. Parker told a room packed with shareholders at the company's annual meeting.

Southwest, the largest carrier at Baltimore-Washington International Airport, was the only major airline to make money last year. It also reported a profit in the first quarter of this year, but the $21 million was 82 percent less than earnings in the first quarter of last year.

"My daddy did teach me that if I ever have a choice between making $21 million or losing $2 billion, it is better to make $21 million," Parker said.

Inaugural address

It was the inaugural shareholder address for Parker, who took the day-to-day reins from Chairman Herbert D. Kelleher in June. During yesterday's meeting, Parker handled the business portion.

That left the shareholder questions for Kelleher, who spent a large part of his time at the podium with a lighted cigarette in one hand, swapping stories and answering queries with his usual panache.

Shareholders asked Kelleher a few financial questions that seemed to stem from the questionable accounting practices exposed in the bankruptcy of Enron Corp.

He was asked about footnotes in Southwest's budget concerning airplane leasing. And he was asked about the steps that are taken by the airline to hedge fuel prices.

Kelleher assured shareholders that all of the items in the budget footnotes were also reflected on the balance sheet. He left the more difficult hedging explanation to Chief Financial Officer Gary Kelly.

"I just wanted Gary to have a moment in the limelight," Kelleher said, promising him a bottle of whiskey for helping out with the answer.

That kind of casual style and audience participation makes Southwest's annual meetings fun compared with the dry events of other companies, attendees say.

Shareholder praise

"It's Herb. This is run like a meeting ought to be run," said Roger Ferger of Sun City, Calif.

"All of us here in the room, that's our hero," agreed shareholder Byrt Scammel of Dallas.

Kelleher scaled back at this year's meeting, leaving Parker and Colleen C. Barrett, president and chief operating officer, to answer reporters' questions.

"Jim and Colleen will be going to address the media, and I will be going upstairs to the men's room," he said.

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