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updated: 10/18/2012 9:48 AM

Southwest posts small profit after weak September

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  • Southwest Airlines eked out a small third-quarter profit in spite of a September slowdown, the company said on Thursday. The airline has been using a mix of fare increases and sales to try to get its prices to a level that travelers will pay. Last month, fares paid by business travelers were soft, CEO Gary Kelly said on CNBC.

      Southwest Airlines eked out a small third-quarter profit in spite of a September slowdown, the company said on Thursday. The airline has been using a mix of fare increases and sales to try to get its prices to a level that travelers will pay. Last month, fares paid by business travelers were soft, CEO Gary Kelly said on CNBC.
    Associated Press

 
Associated Press

Southwest Airlines eked out a small third-quarter profit in spite of a September slowdown, the company said on Thursday.

The airline has been using a mix of fare increases and sales to try to get its prices to a level that travelers will pay. Last month, fares paid by business travelers were soft, CEO Gary Kelly said on CNBC.

"Business travelers were there, but it felt like we needed a little bit more aggressive pricing to entice them," he said.

It's possible the slowdown is over. Kelly said a key measure of revenue is 4 percent higher this month than in October 2011.

While Southwest rolls out the occasional sale to fill planes -- they were 82.1 percent full, a record for the quarter -- it has also been aggressive about trying to raise fares in recent months.

It launched two of the three fare increases that stuck during the quarter, according to a tally by Rick Seaney, CEO of air-travel website FareCompare.com.

And when an attempted increase by United Airlines last week faltered, Southwest that came along and revived it. Seaney wrote at the time that in almost a decade of watching fares, he had never seen a low-cost airline revive a failed domestic price hike.

Southwest earned $16 million for the quarter that ended Sept. 30, or 2 cents per share. Not counting special items, Southwest would have earned $97 million, or 13 cents per share. That's a penny per share more than expected by analysts surveyed by FactSet.

During the same period last year it lost $140 million, or 18 cents per share.

Revenue was the same as a year ago, at $4.31 billion. That was a little lower than analysts had expected.

Southwest paid $3.16 per gallon for jet fuel during the quarter. It said it expects to pay an all-time high of $3.45 per gallon in the fourth quarter. That includes an expense of 9 cents per gallon for derivative contracts, known as fuel hedges, that may turn out to be money-losers based on current prices, the airline said.

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