Southwest Airlines may add routes next year

BWI's busiest carrier says it wants steadier economy

February 13, 2003|By BLOOMBERG NEWS

NAPLES, Fla. - Southwest Airlines Co., the busiest carrier at Baltimore-Washington International Airport, said yesterday that it may resume adding cities to its route network as early as next year after halting its expansion because of reduced air travel in the weak U.S. economy.

Southwest, the only major U.S. carrier to remain profitable since the September 2001 terrorist attacks, last added Norfolk, Va., to its system in October 2001. The Dallas-based airline, which serves 58 cities, didn't add any last year and doesn't plan any additions this year, the first two-year gap since 1987.

"We can get back to a one or two, maybe three, per year pace once we have a little more certainty about our revenue stream, perhaps in '04 or '05," Chief Financial Officer Gary C. Kelly said at a Deutsche Bank Global Transportation Conference. "We don't lack for cities, we just need the economy to be more stable and robust."

At least 140 cities sought Southwest service last year because the airline's presence reduces average fares and increases air travel.

Southwest, which had net income of $241 million last year, added 20 aircraft in 2002 and increased flights. The carrier plans to boost capacity about 4 percent this year, down from an average 10 percent annually through 2001, Kelly said.

Larger rivals such as AMR Corp.'s American Airlines have grounded planes, cut flights and laid off workers as business travel and fares fell after the 2001 attacks. UAL Corp.'s United Airlines and US Airways Group Inc. filed for Chapter 11 bankruptcy protection.

Average fares between Providence, R.I., and BWI fell 73 percent and passenger traffic climbed almost eightfold a year after Southwest began flights between the two cities. Such results were labeled the "Southwest effect" in a 1993 Department of Transportation study.

Southwest shares fell 13 cents yesterday to close at $12.71 on the New York Stock Exchange.

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