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Category Archives: Southwest Airlines

Southwest Airlines reports a record third quarter net profit

Southwest Airlines Company (Southwest Airlines and AirTran Airways) (Dallas) today reported its third quarter 2014 results:

Record third quarter net income, excluding special items1, of $382 million, or $.55 per diluted share, compared to third quarter 2013 net income, excluding special items, of $241 million, or $.34 per diluted share. This represented a 61.8 percent increase from third quarter 2013, and exceeded the First Call consensus estimate of $.53 per diluted share.

Record third quarter net income of $329 million, or $.48 per diluted share, which included $53 million (net) of unfavorable special items, compared to third quarter 2013 net income of $259 million, or $.37 per diluted share, which included $18 million (net) of favorable special items.

Record third quarter operating income of $614 million. Excluding special items, record third quarter operating income of $649 million.
Returned $241 million to Shareholders through dividends and share repurchases.

Return on invested capital1, before taxes and excluding special items (ROIC), for the twelve months ended September 30, 2014, of 19.0 percent, as compared to 10.6 percent for the twelve months ended September 30, 2013.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “We are very pleased to report another record quarterly profit performance, which resulted in a $100 million third quarter 2014 profitsharing expense for our Employees. Excluding special items, third quarter 2014 net income was $382 million, or $.55 per diluted share, and operating income was $649 million, resulting in a 13.5 percent operating margin2. The 386 basis point year-over-year improvement in operating margin, excluding special items, was driven by strong revenues, lower jet fuel prices, and a solid cost performance.

“Total operating revenues were $4.8 billion, which was a 5.6 percent increase from a year ago, despite a four percent decline in trips and two percent fewer seats flown3, as we work through the transition of AirTran aircraft. Our traffic and revenue trends were strong throughout the third quarter, generating a 4.5 percent year-over-year increase in unit revenues, despite a large percentage of our route system in development or conversion as we continued to transition AirTran flying to Southwest. Our third quarter 2014 revenue strength was driven by record load factors and a strong performance in our Rapid Rewards frequent flyer program. Thus far, revenue momentum has continued into October 2014, with favorable load factor and unit revenue trends. Current bookings for November and December are also good.

“Our third quarter 2014 cost performance benefited from lower jet fuel prices and our fleet modernization efforts. With these trends continuing, we are poised for another solid cost performance for fourth quarter 2014. Based on current cost trends, and excluding fuel and oil expense, profitsharing, and special items, we expect full year 2014 unit costs to increase approximately two percent compared to last year.

“Our third quarter 2014 financial performance was very gratifying, and I commend our outstanding Employees of Southwest Airlines for their unending dedication to providing reliable, low cost operations with our legendary, friendly Customer Service. As an industry leader of low fares and low costs, we are very pleased with the transformative and successful execution of our strategic initiatives that contributed significantly to our 19.0 percent ROIC for the twelve months ended September 30, 2014. Our Employees are the very best in the airline industry, and we were thrilled to unveil a bold, new visual expression of our brand in September. Our Heart aircraft livery, airport experience, and logo marries our past to our present and commemorates the transformation of Southwest in 2014. It is dedicated with much gratitude to our People.

“We are also thrilled with the July 1, 2014, launch of Southwest international service. During third quarter, we began service to Oranjestad, Aruba; Montego Bay, Jamaica; Nassau/Paradise Island in the Bahamas; and San Jose del Cabo/Los Cabos and Cancun, Mexico, all markets previously served by AirTran Airways. Next month, we will initiate Southwest service to Punta Cana, Dominican Republic, and Mexico City, which will complete the conversion of international service from AirTran to Southwest. Also during third quarter, we announced that our first destination in Central America will be Juan Santamaria International Airport in San Jose, Costa Rica. The inauguration of this service is expected to be on March 7, 2015, subject to government approval.

“October 13, 2014, was a momentous day for Southwest Airlines. After 34 years, we are finally free from the Wright Amendment restrictions4, and have proudly launched our initial nonstop offerings from Dallas Love Field to seven popular destinations, with ten more nonstop destinations, previously announced, on the horizon.

“In addition to our strong third quarter 2014 earnings performance, our balance sheet, liquidity, and cash flows support our commitment to maintain our financial strength so that we can continue to take great care of our Employees, Customers and Shareholders. At the end of third quarter 2014, we had $3.6 billion in cash and short-term investments. For the nine months ended September 30, 2014, net cash provided by operations was $2.7 billion, and capital expenditures were $1.3 billion, resulting in strong free cash flow1 of $1.4 billion. We have further strengthened our balance sheet and repaid $517 million in debt and capital lease obligations, thus far in 2014, including $167 million in debt and capital lease obligations repaid during the nine months ended September 30, 2014, and $350 million repaid on October 1st. Thus far this year, we have returned $893 million to Shareholders through the payment of $138 million in dividends and the repurchase of $755 million in common stock.”

Financial Results and Outlook

The Company’s third quarter 2014 total operating revenues increased 5.6 percent, while operating unit revenues increased 4.5 percent, on a 1.1 percent increase in available seat miles, all as compared to third quarter 2013. Third quarter 2014 passenger revenues were $4.6 billion, which was an increase of 4.9 percent on a unit basis, as compared to third quarter 2013.

Total operating expenses in third quarter 2014 increased 0.7 percent to $4.2 billion, as compared to third quarter 2013. Third quarter 2014 profitsharing expense was $100 million, compared to $69 million in third quarter 2013. The Company incurred costs (before profitsharing and taxes) associated with the acquisition and integration of AirTran, which are special items, of $23 million during third quarter 2014, compared to $28 million in third quarter 2013. Cumulative costs associated with the acquisition and integration of AirTran, as of September 30, 2014, totaled $488 million (before profitsharing and taxes). The Company expects total acquisition and integration costs to be approximately $550 million (before profitsharing and taxes). Excluding special items in both periods, total operating expenses in third quarter 2014 increased 1.1 percent to $4.2 billion, as compared to third quarter 2013.

Third quarter 2014 economic fuel costs were $2.94 per gallon, including $.05 per gallon in favorable cash settlements from fuel derivative contracts, compared to $3.06 per gallon in third quarter 2013, including $.01 per gallon in favorable cash settlements from fuel derivative contracts. Based on the Company’s fuel derivative contracts and market prices as of October 17, 2014, fourth quarter 2014 economic fuel costs are expected to be in the $2.70 to $2.75 per gallon range, compared to fourth quarter 2013’s $3.05 per gallon. As of October 17, 2014, the fair market value of the Company’s hedge portfolio through 2018 was a net liability of $236 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding fuel and oil expense, profitsharing, and special items in both periods, third quarter 2014 operating costs increased 2.6 percent from third quarter 2013, and increased 1.5 percent on a unit basis.

Operating income in third quarter 2014 was $614 million, compared to $390 million in third quarter 2013. Excluding special items, operating income was $649 million in third quarter 2014, compared to $439 million in the same period last year, a 47.8 percent increase year-over-year.

Other expenses in third quarter 2014 were $89 million, compared to other income of $29 million in third quarter 2013. The $118 million swing primarily resulted from $66 million in other losses recognized in third quarter 2014, compared to $59 million in other gains recognized in third quarter 2013. In both periods, these gains/losses included ineffectiveness and unrealized mark-to-market amounts associated with a portion of the Company’s fuel hedging portfolio, which are special items. Excluding these special items, third quarter 2014 had $16 million in other losses, compared to $19 million in third quarter 2013, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Fourth quarter 2014 premium costs related to fuel derivative contracts are currently estimated to be $13 million, compared to $22 million in fourth quarter 2013. Net interest expense in third quarter 2014 was $23 million, compared to $30 million in third quarter 2013.

For the nine months ended September 30, 2014, total operating revenues increased 5.3 percent to $14.0 billion, and total operating expenses were $12.4 billion, resulting in operating income of $1.6 billion, compared to $893 million in operating income for the same period last year. Excluding special items, operating income was $1.7 billion for the nine months ended September 30, 2014, compared to $1.0 billion for the same period last year. Net income for the nine months ended September 30, 2014, was $946 million, or $1.36 per diluted share, compared to $542 million, or $.75 per diluted share, for the same period last year. Excluding special items, net income for the nine months ended September 30, 2014, was $993 million, or $1.42 per diluted share, compared to $569 million, or $.79 per diluted share, for the same period last year.

Balance Sheet and Cash Flows

As of September 30, 2014, the Company had $3.6 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion. Net cash provided by operations during third quarter 2014 was $240 million, and capital expenditures were $433 million. The Company repaid $48 million in debt and capital lease obligations during third quarter 2014, and intends to repay an additional $395 million in debt and capital lease obligations during fourth quarter 2014, including $350 million repaid on October 1, 2014.

During third quarter 2014, the Company returned $241 million to its Shareholders through the payment of $41 million in dividends and the repurchase of $200 million in common stock, or 5.0 million shares, pursuant to an accelerated share repurchase (ASR) program executed during the quarter. This ASR program was completed in early October, and the Company then received an additional 1.1 million shares, bringing the total shares repurchased under the third quarter 2014 ASR program to 6.1 million. During third quarter, the Company also received the remaining 1.4 million shares pursuant to the second quarter 2014 $200 million ASR program, bringing the total shares repurchased under that ASR program to 7.4 million. Thus far in 2014, the Company has returned $893 million to its Shareholders through $138 million in dividends, and the repurchase of $755 million in common stock, or 29.2 million shares. The Company has $580 million remaining under its existing $1 billion share repurchase authorization.

Fleet

During third quarter 2014, the Company’s fleet increased by two to 685 aircraft at period end. This reflects the third quarter 2014 delivery of 11 new Boeing 737-800s and two pre-owned Boeing 737-700s, as well as the retirement of one Boeing 737-500. In addition, the Company removed ten Boeing 717-200s from service during third quarter 2014 in preparation for transition out of the fleet.

Boeing 737 Delivery Schedule:

Southwest 737 Delivery Schedule 9.30.14

Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 737-7H4 N909WN (msn 32458) arrives at Las Vegas.

Southwest Airlines Aircraft Slide Show: AG Slide Show

AirTran Airways Aircraft Slide Show: AG Slide Show

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Southwest Airlines and the IAM reach a tentative agreement

Southwest Airlines (Dallas) and the International Association of Machinists and Aerospace Workers (IAM), representing the carrier’s approximately 6,000 Customer Service Agents and Customer Support and Services Representatives, announced today the two parties have reached a tentative agreement. The tentative agreement is for a new four year contract and requires Membership ratification. The current contract became amendable in October 2012.

In the upcoming weeks, the IAM membership will be given the full details of the agreement and have the opportunity to vote on ratification.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Southwest’s Boeing 737-7H4 N708SW (msn 27842) in the new “Heart” livery arrives at Los Angeles International Airport (LAX).

Southwest Aircraft Slide Show: AG Slide Show

Southwest Airlines celebrates the end of the Wright Amendment at Dallas Love Field with a major expansion

Southwest Airlines (Dallas) today is celebrating the end of the flight distance restrictions under the expiring Wright Amendment at its Dallas Love Field base. The airline issued this statement about additional routes from DAL:

Southwest ain't no Virgin

Southwest Airlines is giving away 1,000 free flights to celebrate its new-found freedom from its home airport, Dallas Love Field.

The carrier is celebrating the repeal of the law known as the “Wright Amendment” which was imposed in 1979, limiting the reach of Dallas’ convenient airport. Starting today, the airline begins offering new nonstop flights from Love Field to the first of 17 destinations.

Denver
Chicago (Midway)
Baltimore/Washington
Washington, D.C. (Reagan National)
Las Vegas
Los Angeles (LAX)
Orlando

Beginning November 2, 2014, Southwest Airlines will continue its rollout of new nonstop flights from Love Field to:

Phoenix
Orange County/Santa Ana
San Diego
Tampa
Ft. Lauderdale/Hollywood
New York City (LaGuardia)
Atlanta
Nashville

Beginning January 6, 2015:

San Francisco (SFO)
Oakland (OAK)

Southwest Goodbye Wright

“After 34 long years, Southwest now has the right to spread our low fares, our friendly policies, our Fun-LUVing Attitudes, and Legendary Customer Service,” said Gary Kelly, Southwest Airlines Chairman, President, and Chief Executive Officer during a spirited news conference in front of airline Employees and community Leaders. “Most importantly, we have the right to spread our LOVE across the United States anywhere we want to fly nonstop from our home airport, and our hometown, Dallas, Texas, On this day, October 13, 2014, Southwest Airlines celebrates that Dallas Love Field has officially been Set Free!”

Southwest DAL Route Map

Above: New Route Map from Dallas Love Field.

Customers on each of the first departures from Love Field to one of the seven new nonstop destinations received special gifts including shirts, Southwest Vacations packages, and more, as a way to celebrate the new flights and thank Customers for their support. In keeping with the week of NONSTOP Love, Southwest Airlines Rapid Rewards® Credit Card is celebrating by surprising Customers on flights throughout the week with various gifts and giveaways. Dallas-based Batter Up Cake Shop also surprised Customers and Employees with a cake dedicated to the new nonstop destinations the carrier is now offering from Love Field.

2014 is a milestone year for the 43-year-old airline. The carrier launched international flights to the Caribbean and Mexico, remains on track to complete the AirTran acquisition by the end of the year, revealed a new look, and now is breaking through the wall of the Wright Amendment flight restrictions imposed in 1979 (international nonstop restrictions still apply).

Top Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 737-7H4 N708SW (msn 27842) in the new heart livery arrives in Las Vegas.

Southwest Airlines: AG Slide Show

Southwest Airlines Aircraft Slide Show:

Video: New Southwest TV commercial:

WSJ: Southwest Airlines under CEO Gary Kelly: Freer to Fly, but Also More Baggage

 

Southwest 2014 logo-1

Southwest Airlines (Dallas) under CEO Gary Kelly is examined by Scott McCartney of the Wall Street Journal: CLICK HERE

Some of the new TV commercials and videos for the new brand:

Southwest TV commercials from the past:

Southwest Airlines: AG Slide Show

The changing face of Dallas Love Field, Delta Air Lines to exit Love Field on October 12

DAL Love Field Entrance (City of Dallas)(LR)

Dallas Love Field will dramatically change on October 13 when the Wright Amendment expires. With an expanding new terminal design and a different set of airlines, the airport is evolving with new long-range routes.

Delta Air Lines (Atlanta) will end its Delta Connection operations at Dallas’ Love Field on October 12. According to the Dallas News, the City of Dallas has served notice to the carrier that it can no longer accommodate the carrier after that date with gates in the new Terminal 2. Delta has served DAL since 2008 with service to Atlanta from Terminal 1. Previously Delta served Love Field when it was the only airport for Dallas. Delta currently subleases the two gates from American Airlines. Those two gates will go to Virgin America. On October 13 the Wright Amendment will expire.

According to Wikipedia, the Wright Amendment of 1979 was a federal law governing traffic at Dallas Love Field with some provisions also applying to other airfields in the Dallas-Fort Worth Metroplex including Fort Worth Meacham International Airport and Addison Airport. It originally limited most nonstop flights from Love Field to destinations within Texas and neighboring states. Additional states were added to the permissible area in 1997 and 2005. In 2006, the amendment was repealed but left some restrictions intact until October 13, 2014 but with an added restriction on the number of gates allowed.

Dallas Love Field is named after Moss L. Love, who while assigned to the U.S. Army 11th Cavalry, died in an airplane crash near San Diego, California on September 4, 1913, becoming the 10th fatality in U.S. army aviation history. His Wright Model C biplane crashed during practice for his Military Aviator Test. Love Field was named by the United States Army on October 19, 1917.

Read the full article: CLICK HERE

Meanwhile the City of Dallas has issued this description of its new DAL Terminal 2:

DAL logo

The new Love Field Airport will increase efficiency for travelers while maintaining the convenience that Love Field currently offers passengers. In the new design, the terminal will decrease in size approximately 25 percent by replacing a large amount of unused and outdated space with modern and efficient facilities. The three original concourses will be demolished and consolidated into one convenient, centrally located concourse for all airlines. In addition to the new concourse, the check-in and baggage claim areas will be redesigned. The main lobby space will be renovated but will retain the overall structure and volume of the original design. This portion of the facility is the symbolic heart of the terminal complex and a vital part of the passenger processing operation. In addition, the LFMP will more than double the amount of available airport concessions – yet another tremendous benefit for Love Field Customers.

DAL Love Field Baggage Claim

Terminal 2 Baggage Claim.

Southwest Airlines has been operating from the new Terminal 2. Southwest Airlines previously announced that it would be adding new flights to Baltimore/Washington, Denver, Las Vegas, Orlando, Washington (Reagan) and Chicago (Midway) on October 13, 2014. Southwest also announced that on November 2, 2014, it would add new service to Atlanta, Nashville, Fort Lauderdale/Hollywood, Los Angeles, New York (LaGuardia), Phoenix, San Diego, Orange County and Tampa. On March 10, 2014, Southwest announced that in 2015, it would add new service to Boston, Oakland, Panama City Beach, Portland (Oregon), and San Jose, California.

Virgin America begins Los Angeles, San Francisco and Washington (Reagan National) service on October 13, 2014) followed by New York (LaGuardia) on October 28, 2014.

In the new Terminal 2, Southwest Airlines operates from Gates 1-10, 12, 14, 16, 18-20, On October 1, 2014 United Express will operate from Gates 15 and 17 and Virgin America will operate from Gates 11 and 13.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Terminal 1 closes on October 1, 2014.

DAL Terminal Map

Current Terminal Map (City of Dallas)

DAL Love Field original terminal

The original Dallas Municipal Airport, Love Field (City of Dallas).

All images by the City of Dallas.

Video by Southwest Airlines of the new DAL Terminal:

Video by Southwest Airlines: A Day at Dallas Love Field:

Southwest Airlines to launch its first international route from Houston Hobby to Aruba on March 7, 2015

Southwest Airlines (Dallas) will launch its first international route from Houston’s Hobby Airport (HOU) on March 7, 2015 with a weekly flight to Aruba per Airline Route.

Copyright Photo: Ken Petersen/AirlinersGallery.com. Boeing 737-8H4 N8306H (msn 36983) departs from Raleigh-Durham.

Southwest Airlines: AG Slide Show

Southwest Airlines to purchase 3 million biofuel gallons yearly from Red Rocks Biofuels

Southwest Airlines (Dallas) has signed an agreement with Red Rocks Biofuels LLC (RRB) to purchase low carbon renewable jet fuel, made using forest residues that will help reduce the risk of destructive wildfires in the Western United States. The airline’s agreement with RRB covers the purchase of approximately three million gallons per year. The blended product will be used at Southwest’s Bay Area operations with first delivery expected in 2016.

RRB’s first plant will convert approximately 140,000 dry tons of woody biomass feedstock into at least 12 million gallons per year of renewable jet, diesel, and naphtha fuels.

Southwest is a long-time member of Commercial Aviation Alternative Fuels Initiative (CAAFI) which is a government and industry coalition for the development and deployment of alternative jet fuel for commercial aviation. As a member of CAAFI, the airline has followed the progress of alternative fuel technologies. Red Rock Biofuels is the first viable opportunity the airline has found to meet its financial and sustainability objectives.

Copyright Photo: Ken Petersen/AirlinersGallery.com. A nice ramp portrait of Boeing 737-8H4 N8306H (msn 36983) with the Split Scimitar Winglets painted in the now old 2001 “Canyon Blue” livery.

Southwest Airlines: AG Slide Show

Southwest Airlines to operate seasonal Caribbean service from Milwaukee to both Montego Bay and Punta Cana

Southwest Airlines (Dallas) will add seasonal and weekly (saturdays) service from Milwaukee to both Montego Bay, Jamaica and Punta Cana, Dominican Republic from January 24 through April 4, 2015 per Airline Route.

Meanwhile the company is trying to lower its rising costs with new efforts to remain competitive with its union contracts. Bloomberg Businessweek looks at this critical effort. Read the full article: CLICK HERE

Copyright Photo: Tony Storck/AirlinersGallery.com. “Heart Two” in the form of Boeing 737-8H4 N8645A (msn 36907) painted in the dazzling 2014 livery arrives at the Baltimore/Washington (BWI) hub.

Southwest Airlines: AG Slide Show
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Video: Repainting the fleet:

 

Southwest Airlines files to serve San Jose, Costa Rica from Baltimore/Washington

Southwest Airlines (Dallas) announced today (September 12) that it has filed an application with the U.S. Department of Transportation (DOT) to add its first destination in Central America with daily roundtrip service between Baltimore/Washington Thurgood Marshall International Airport (BWI) and Juan Santamaria International Airport (SJO) in San Jose, Costa Rica, beginning on March 7, 2015.

Costa Rica will be the sixth near-international country served by Southwest Airlines from its U.S. gateway cities and the first new destination in the carrier’s network after the integration of wholly owned subsidiary AirTran Airways is completed by the end of this year. Service to Punta Cana, Dominican Republic, and Mexico City begins on November 2, as Southwest converts existing AirTran service in those destinations. Southwest began service this summer to Aruba, The Bahamas, Jamaica, and both Cancun and San Jose del Cabo/Los Cabos, Mexico.

Southwest Airlines began service from Baltimore/Washington in September 1993, with ten flights offering scheduled service through nonstop destinations Chicago (Midway) and Cleveland. Southwest, 21 years later, is the largest carrier at BWI in terms of daily departure and, by March 2015, will fly nonstop to 60 cities with more than 200 departures a day.

In October 2006, Southwest began serving Washington Dulles International Airport (IAD) and added service to Ronald Reagan Washington National Airport (DCA) in July 2012. By November, Southwest Airlines will be the second largest carrier at DCA in terms of seats, offering 44 flights a day to 14 destinations: Akron-Canton, Atlanta, Austin, Chicago (Midway), Dallas (Love Field), Ft. Myers/Naples, Houston, Indianapolis, Kansas City, Milwaukee, Nashville, New Orleans, St. Louis, and Tampa.

Top Copyright Photo: Bruce Drum/AirlinersGallery.com. Boeing 737-7H4 N214WN (msn 32486) in the Maryland One scheme arrives in Las Vegas

Southwest Airlines: AG Slide Show

 

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Bottom Copyright Photo: Southwest Airlines. The new heart logo is directed too at its employees as it grows internationally and finalizes the AirTran merger.

Southwest Airlines HeartVideo:

 

Southwest Airlines rebrands with a flashy new look and theme

Heart One. Stephen M. Keller

Southwest Airlines (Dallas) today officially unveiled this new livery, theme and logo in a special ceremony this morning in Dallas despite some images being leaked, probably from where it was painted in Victorville, CA. The first aircraft to be repainted is the pictured Boeing 737-8H4 N8642E (msn 42525) (above) delivered new on August 6, 2014.

Southwest The Heart sets us apart (LRW)

The company issued this statement this morning:

Southwest Airlines introduced a modern new look to its iconic brand today (September 8) at an event dedicated to its Employees. The airline proudly unveiled a new aircraft livery, named Heart One, airport experience, and logo. The new look puts the airline’s Heart on display, showcasing the strength of the nearly 46,000 Employees Companywide—whose dedication can be felt by every Customer each time Southwest Airlines connects them to what’s important in their life.

“Our collective heartbeat is stronger and healthier than ever, and that’s because of the warmth, the compassion, and the smiles of our People,” said Gary Kelly, Southwest Airlines Chairman, President, and Chief Executive Officer. “The Heart emblazoned on our aircraft, and within our new look, symbolizes our commitment that we’ll remain true to our core values as we set our sights on the future.”

It’s a big year for Southwest, as the airline introduces its legendary brand to international destinations; the repeal of the Wright Amendment is within sight; and the integration of AirTran Airways operations is on track to be completed later this year. Southwest continues to evolve, serving more than 90 destinations, and expanding its footprint in big markets like New York City and Washington, D.C.

“With all these exciting changes happening, we thought it was time for a new visual expression of our brand—one that marries our past to our present and sets the course for where we’re headed in the future,” Kelly said.

Southwest 2014 logo

NEW LOOK, SAME GREAT EXPERIENCE

The announcement of Southwest Airlines’ modern new look introduces a striking new livery design, new iconic Southwest logo (above), newly designed inflight materials and magazine, an advertising campaign that celebrates the airline’s unique personality, and a revamped experience both online and at its airport locations, all of which showcase the unique spirit and Heart of the brand, and communicate its focus on Customer care. In addition, the airline will introduce a refresh to its signature “DING!” mnemonic.

To bring this all to life, Southwest collaborated with advertising and branding partners GSD&M, Lippincott, VML, Razorfish and Camelot Communications—each an expert in their own field. The task was given to distill more than 40 years of rich history into one modern, impactful look, representing the exciting future of a one-of-a-kind airline.

“The job wasn’t to change who we are,” said Kevin Krone, Southwest’s Vice President and Chief Marketing Officer. “We already know who we are. The job was to keep the elements of Southwest that our Employees and Customers love, and to make them a bold, modern expression of our future.”

“With so much of Southwest’s focus firm¬ly set on the future, it was a natural time to look at our visual identity,” said Bob Jordan, Southwest Airlines Executive Vice President and Chief Commercial Officer.

“As we developed the identity, it wasn’t just about the new livery or the logo, but about developing the total, integrated brand expression of Southwest,” said Rodney Abbot, Senior Design Partner at Lippincott.

Southwest new heart logo

“The Heart is our identity the same way the Heart of our Southwest Employees enhances the Customer experience, said Krone. “It’s the finishing touch that makes the Southwest brand unique, demonstrating that Southwest cares about each and every Customer. Even on the belly of the plane, the Heart is a symbolic reminder that we put our Hearts into every flight.”

“For more than three decades, GSD&M has partnered with Southwest Airlines, so we certainly understand and believe in the power of Southwest’s Heart,” said Marianne Malina, President of GSD&M. “We were thrilled with the opportunity to partner with an extraordinary and talented team to bring Southwest’s love of People front and center. This work is a celebration of the great brand that Southwest has become and, most importantly, where it’s headed next.”

Southwest Airlines and its partners did comprehensive research and held numerous focus groups with Employees and Customers to determine how best to create the new look. The airline heard that it was important to remain unique and to retain its personality; for these reasons, Southwest continues to use the vibrant color palate and striped tail that has long identified the carrier, while adding a modern touch, proudly displaying the Southwest name on the side of the fuselage and presenting the Heart on the aircraft belly. Southwest has had several different liveries and logos throughout its 43-year history; remaining current and relevant is critical to the sustainability and future growth of the brand.

As a legendary low-fare carrier, Southwest doesn’t make a change this bold without first assessing cost impact. The approach and focus with this launch has been with the intent to remain cost-neutral by using a phased rollout. Aircraft will receive the newly painted livery within the aircraft’s existing repainting schedule, with new aircraft delivered in the new Heart livery. In addition, many of the future airport conversions will be integrated into existing and upcoming airport improvement projects. Because Southwest is taking this cost-conscious approach to the conversion of planes and airports, it might be some time before Customers and Employees see the new design in person.

Heart One. Stephen M. Keller

Copyright Photo: Southwest Airlines. The company again has bold new fuselage titles for good visibility.

Here is the message from Chairman, President and CEO Gary Kelly:

Forty-three years ago, Southwest launched a low-fare revolution that is still alive and well today. Ignited by a Maverick Spirit and a passion for serving others, we set out to do things differently than the other guys. Today, the world is a much different place than it was back in 1971. Our industry landscape is hardly recognizable, and our Customers’ travel habits have evolved. Southwest has evolved too — but we have never stopped smiling.

We’ve been hard at work over the past decade transforming Southwest to be just as relevant and successful for the next four decades. We enhanced our cabin interiors, installing WiFi and offering free live TV onboard (thanks to DISH®!). With the Boeing 737-800 series aircraft, we’re bringing on larger airplanes that are better suited for longer flights. We expanded in big markets like New York City and Washington, D.C. and revamped our Rapid Rewards® Frequent Flyer program. We acquired AirTran Airways, and we’re in the final stages of integrating our two airlines to become one by the end of this year. The AirTran integration set the stage for Southwest to launch international service for the first time in our history, which we did in July. And next month, a federal law (the Wright Amendment) restricting where we can fly domestically from our home airport of Dallas Love Field will be lifted — giving us the freedom to serve more nonstop markets from our hometown.

With all these exciting changes happening, we thought it was time for a new visual expression of our brand — one that marries our past to our present and sets the course for where we’re headed in the future. So this month, we’re introducing a modern, new look. You’ll see it throughout your experience with us. Our new logo showcases a Heart — fitting for a Company whose very core has always been fueled by the heartbeat of its People. Our collective heartbeat is stronger and healthier than ever, and that’s because of the warmth, the compassion, and the smiles of our People. This Heart symbolizes our commitment to you that we’ll remain true to our core as we set our sights on the future.

What started as a revolution has undergone an evolution. But we haven’t changed what we stand for: low fares, a convenient flight schedule, and the friendliest Employees in the world. Our Purpose is to connect you, our valued Customer, to the moments that are most important in your life, through friendly, reliable, and low-cost air travel. That was true in 1971, and it’s just as true today. So, while our look may be new, our DNA is the same — with the big Heart and big smile you have come to LUV. Thanks for coming along for the ride!

All images by Southwest Airlines.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Southwest Airlines Aircraft Slide Show: AG Slide Show

What do you think?

Video: The unveiling of the new brand:

Video: The evolution of the heart logo:

Video: Repainting the first aircraft:

A new color scheme is also coming for Southwest Airlines

Southwest with a heartSouthwest Plane Palooza

Southwest Airlines (Dallas) is also planning to make an announcement tomorrow (September 6). It is believed the company is planning to introduce a new livery too.

A Boeing 737-800 is expected to be rolled out tomorrow at Dallas’ Love Field showing a new blue, yellow and red color scheme.

Southwest logo

Like Frontier, Southwest issued this short teaser comment:

We’ve been working on something special. And Monday, we’ll get to the heart of the matter.

DFWTower.com has published photos of a Southwest 737-800 in a hangar with the new design. It does not appear to be a special livery. The main changes, an apparent deeper shade of blue and white fuselage titles: CLICK HERE

This will be third basic livery for Southwest:

Top Image: Southwest Airlines. Southwest recently had a “Plane Palooza” voting contest for its special liveries on Facebook. The finalists were Florida One and Lone Star One. Naturally for the Texas-based airline, Lone Star One won.

Copyright Photo: Bruce Drum/AirlinersGallery.com. Reflecting an American Southwest look, Southwest started operations with this orange, red and mustard color scheme. When Southwest launched intrastate operations in Texas on June 18, 1971 this was the color scheme on its three Boeing 737-200s. Boeing 737-2H4 N21SW (msn 20345) (+ the other two) are seen at the Love Field base. The full titles ran up the rear fuselage and the tail. Later the titles were shortened to just “Southwest” and were placed alone on the tail.

Copyright Photo: Bruce Drum/AirlinersGallery.com. The current “Canyon Blue” fuselage top livery was introduced in 2001. Boeing 737-3H4 N608SW (msn 27928) departs from Fort Lauderdale-Hollywood International Airport.

Southwest Airlines Aircraft Slide Show: AG Slide Show

In other news, Southwest is recycling its old leather seats. According to CNN, “Southwest Airlines after a large-scale redesign of many of its 737 aircraft, the carrier found itself with an excess of 80,000 leather seat covers — enough to fill the Empire State Building.

Southwest dubbed the initiative “Luv Seat: Repurpose with Purpose,” and reached out to potential partners to take the used leather, but found that there were few takers.

Following the advice of Bill Tiffany, a Southwest VP who grew up in Kenya, the airline started looking towards Africa for recipients of the used leather. Rather than just donating the goods and leaving it there, the airline decided to take a more holistic approach, giving the materials to NGOs that will use them to provide job training and health education.

The main partner is SOS Children’s Villages Kenya, which is providing paid apprenticeships and training to orphaned youth, who in turn make shoes and soccer balls from the leather. The shoes are given to Maasai Treads, who distributes them as part of a campaign to fight debilitating foot parasites. The soccer balls are donated to Alive & Kicking, a charity that uses sport to educate young people on HIV/AIDS and malaria prevention.”

Great idea Southwest. Read the full article: CLICK HERE

Photo courtesy of Southwest Airlines.

Southwest seats made into soccer balls (Southwest)

Southwest’s pilots applaud the DOT decision concerning the application of Norwegian Air International

Southwest Airlines‘ (Dallas) pilots, represented by SWAPA, have issued this statement:

The Southwest Airlines Pilots’ Association (SWAPA) commends the United States Department of Transportation (DOT) for denying Norwegian Air International (NAI) a temporary foreign air carrier operating authorization. NAI is a subsidiary of Norwegian Air which is located in Norway. NAI has sought to operate service to the U.S. as an Irish airline where it has no operating flights or history of operations.

“The denial of a temporary operating authorization is applauded by the pilots of Southwest Airlines,” said SWAPA Governmental Affairs Chair Captain Paul Jackson. “We agree with Secretary Foxx’s assertion that the application of Norwegian Air International is not in the public interest.”

This denial is only for the temporary application and is not a denial of the full application approval for a foreign carrier exemption with the DOT by NAI. The pilots of Southwest Airlines have opposed the application of NAI from early in the process due to the company’s “flag of convenience” strategy that locates the airline away from their home country of Norway. The NAI application for a foreign carrier operating authorization has been on file with the DOT since early this year. It is opposed by airline employees and management across the U.S. and the EU.

“We encourage Norwegian to join the marketplace under the labor laws and rules of their home country and not seek a scheme to avoid them,” Captain Jackson continued. “We strongly believe that our product and the work of our industry can stand up to any competitor if they play by the rules in place and do not seek to lower costs at any price.”

Copyright Photo: Bruce Drum/AirlinersGallery.com. Boeing 737-7H4 N953WN (msn 36668) taxies to the runway at Seattle-Tacoma International Airport.

Southwest Airlines Aircraft Slide Show: CLICK HERE

Southwest to drop three Caribbean routes from Atlanta

Southwest Airlines (Dallas) effective March 1, 2015 will drop two weekly international routes from Atlanta; Aruba and Montego Bay. The company will also drop the Atlanta-San Juan route on March 7, 2015 per Airline Route.

Effective on March 7, 2015 Southwest will add weekly San Antonio-New Orleans service.

Copyright Photo: Ken Petersen/AirlinersGallery.com. Boeing 737-7H4 N436WN (msn 32456) departs from New York’s LaGuardia Airport (LGA).

Southwest Airlines: AG Slide Show

IAM files for mediation at Southwest Airlines

The International Association of Machinists and Aerospace Workers (IAM) has issued this statement against Southwest Airlines (Dallas):

After more than two years of direct talks with Southwest Airlines, the International Association of Machinists and Aerospace Workers (IAM) announced it will file for mediation with the National Mediation Board (NMB), the federal agency that oversees contract negotiations in the airline industry.

“Southwest earned nearly a billion dollars last year, is on pace to report a larger profit for this year, has the most productive workforce in the airline industry and yet refuses to offer any real improvements,” said IAM District 142 President Tom Higginbotham. “Management is hell-bent to move to a risky variable compensation system as opposed to offering guaranteed wage increases. It’s clear this is a numbers oriented airline instead of a people oriented airline.”

Coupled with Southwest’s deteriorating labor relations, the carrier’s operational performance has plummeted. The carrier has among the worst on-time arrival rate in the airline industry, it ranks among the bottom in mishandled baggage and hovers at the top of the airline industry in denied boardings.

“Southwest has merged its way to super-profits and is doing everything it can to stonewall its employees from sharing fairly in the success they’ve worked so hard to create,” continued Higginbotham. “This is greed, pure and simple and the IAM will not stand for it.”

If the IAM’s application for federal mediation is granted by the NMB, the agency then begins the process of attempting to resolve the differences between the parties via mediated discussions. If no agreement can be reached through mediation, the Railway Labor Act (RLA)—the federal law that governs collective bargaining in the airline industry—has several mechanisms to bring both sides together, including arbitration and a possible strike.

The IAM represents approximately 6,000 passenger service and reservation agents at the carrier and has never before had to utilize the NMB’s mediation services to achieve an agreement with Southwest.

The IAM represents over 100,000 workers in the airline and railroad sectors and is the largest transportation union in North America.

Meanwhile Southwest issued this statement about “listening” to its internal and external customers through a new “Listening Center”:

On August 26 Southwest Airlines unveiled a Listening Center devoted to engaging with Employees and Customers in real time. Located at Southwest Airlines Headquarters in Dallas, the Listening Center is the first of its kind in the domestic airline industry. It serves as the airline’s nerve center, integrating traditional media, social media, and operational data to allow various functions to move quickly and efficiently from insight to action.

The Listening Center is staffed seven days a week with Southwest Employees from the Customer Relations, Communication, and Marketing departments. The Employees are available around the clock to answer questions, engage with Customers, and share feedback across the organization to enhance the Customer experience.

“The Listening Center symbolizes our commitment to listening to our internal and external Customers, and taking that feedback to make smarter business decisions,” said Linda Rutherford, Vice President Communication & Outreach at Southwest Airlines. “As we continue to evolve as a social business, we’ll connect with our Employees and Customers in ways that are meaningful to them.”

The Listening Center works closely with Southwest’s Network Operations Control center (NOC), and has staffed a satellite Listening Center within the heart of the NOC to relay real-time feedback from Customers as operational challenges arise. The satellite Listening Center allows Employees on the Social Media Team to proactively communicate with Customers as operational updates become available.

“The best companies are innovating at the speed of the customer,” said Scott McCorkle, chief executive officer, Salesforce ExactTarget Marketing Cloud. “Utilizing our technology, Southwest Airlines is connecting with their customers to deliver a phenomenal customer experience.”

Southwest Airlines is regarded as a pioneer in the social media space and has been recognized in many ways for embracing social technologies. The Nuts About Southwest Blog is a PR News Hall of Fame inductee, and many social media campaigns and Social Media Team members have been awarded best-in-class recognitions.

The Listening center was designed by Corgan and built by Structure Tone. The visualizations displayed within the facility are powered by Salesforce ExactTarget Marketing Cloud’s Radian6 Command Center and Crowd Reactive. The technology allows Southwest to quickly identify hot topics, influencers, trends, and consumer-generated media.

Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 737-8H4 N8305E (msn 36683) touches down in Las Vgeas.

Southwest Airlines: AG Slide Show

Southwest Airlines launches Mexican flights to Cancun and San Jose del Cabo/Los Cabos

Southwest Airlines (Dallas) launched its initial service to Mexico with inaugural flights over the weekend.  The nonstop routes previously served by wholly owned subsidiary AirTran Airways now operate daily between Orange County/Santa Ana and San Jose del Cabo/Los Cabos, Mexico, and between Cancun and both Atlanta and Baltimore/Washington.

Saturday-only service on Southwest between Milwaukee and Cancun begins August 16, 2014.

The Company plans to fully convert all international and domestic service currently flown by AirTran to Southwest by the end of this year. The carriers’ flights schedules are published through March 6, 2015, and are available for purchase at southwest.com.

AirTran Airways continues to operate daily service between Mexico City and Orange County/Santa Ana until the route converts to Southwest Airlines service on Nov. 2, 2014.

Southwest Airlines began international service on July 1 with flights to Oranjestad, Aruba; Montego Bay, Jamaica; and Nassau, The Bahamas, in the Caribbean. International service from Denver begins Oct. 7. Additional international service from Chicago (Midway), Austin, and San Antonio begins Nov. 2, the same day Southwest Airlines begins serving Punta Cana, Dominican Republic*, and Mexico City.

*subject to Government approvals

Copyright Photo: Bruce Drum/AirlinersGallery.com. Boeing 737-7H4 N228WN (msn 32496) departs from Fort Lauderdale-Hollywood International Airport.

Southwest Airlines: AG Slide Show

Southwest Airlines announces new nonstop service between Dallas Love Field and both San Francisco and Oakland

Southwest Airlines (Dallas) has announced two additional destinations from Dallas (Love Field). Flights between Dallas and both San Francisco International Airport and Oakland International Airport begin on January 6, 2015.

The carrier previously announced its post Wright Amendment offerings from Dallas (Love Field) which, along with the additions of Oakland and San Francisco, gives Dallas Customers access to a total of 33 destinations via nonstop service on Southwest Airlines by January 6, 2015.

Beginning October 13, 2014, Southwest will add nonstop service from Dallas (Love Field) to Baltimore/Washington, Chicago (Midway), Denver, Las Vegas, Los Angeles, Orlando, and Ronald Reagan Washington National.

On November 2, 2014, Southwest will add additional nonstop city offerings from Dallas (Love Field) to Atlanta, Ft. Lauderdale/Hollywood, Nashville, New York (LaGuardia), Phoenix, San Diego, Orange County/Santa Ana, and Tampa.

Copyright Photo: Ton Jochems/AirlinersGallery.com. Boeing 737-8H4 N8301J (msn 36980) “Warrior One” lands in Las Vegas.

Southwest Airlines:

Southwest Airlines and SeaWorld part ways, Shamu airplanes to be repainted

Southwest Airlines (Dallas) and SeaWorld have issued this joint statement:

“Southwest and SeaWorld have mutually decided not to renew their partnership when the contract expires at the end of the year. Our promotional marketing relationship began in 1988 and was one of the first of its kind – focused on co-marketing opportunities between Southwest passengers and SeaWorld visitors.

The companies decided not to renew the contract based on shifting priorities. Southwest is spreading its wings with new international service, and increased focus on local market efforts. With an increasing international visitor base, SeaWorld is looking to focus on new and growing markets in Latin America and Asia, among others.

The companies will continue to work together through Southwest Vacations. Southwest’s three specialty airplanes will return to the company’s traditional livery.

Southwest and SeaWorld have enjoyed their long relationship, and wish each other continued success.”

Southwest and SeaWorld have both been coming under a lot of public pressure on change.org in the form of a public petition calling for Southwest to separate itself from SeaWorld in the wake of the documentary Blackfish movie which criticized SeaWorld’s on-going procedures concerning the capture, training and containment of its orca whales. The death of a SeaWorld female trainer by an orca in captivity also spurred the release of the movie.

Read the petition: CLICK HERE

SeaWorld logo

SeaWorld responded to the movie Blackfish with this statement: CLICK HERE

Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. The three remaining Shamu specially painted Boeing 737s will be repainted. Boeing 737-7H4 N713SW (msn 27847) arrives in Los Angeles.

Southwest Airlines: AG Slide Show

Bottom Copyright Photo: Ton Jochems/AirlinersGallery.com. The colorful “Penguin One” will also be erased.

Video: Blackfish movie trailer:

FAA proposes a $12 million civil penalty against Southwest Airlines, Southwest has 30 days to respond

Federal Aviation Administration (FAA) (Washington) has issued this statement concerning Boeing 737 maintenance issues by Southwest Airlines (Dallas) and a contractor:

The U.S. Department of Transportation’s Federal Aviation Administration (FAA) is proposing a $12 million civil penalty against Southwest Airlines for failing to comply with Federal Aviation Regulations in three separate enforcement cases related to repairs on Boeing 737 jetliners operated by the Dallas-based airline.

The FAA alleges that beginning in 2006, Southwest conducted so-called “extreme makeover” alterations to eliminate potential cracking of the aluminum skin on 44 jetliners. The FAA conducted an investigation that included both the airline and its contractor, Aviation Technical Services, Inc., (ATS) of Everett, Wash. Investigators determined that ATS failed to follow proper procedures for replacing the fuselage skins on these aircraft. FAA investigators also determined that ATS failed to follow required procedures for placing the airplanes on jacks and stabilizing them. All of the work was done under the supervision of Southwest Airlines, which was responsible for ensuring that procedures were properly followed.

Southwest returned the jetliners to service and operated them when they were not in compliance with Federal Aviation Regulations, the FAA alleges. The regulatory violations charged involve numerous flights that occurred in 2009 after the FAA put the airline on notice that these aircraft were not in compliance with either FAA Airworthiness Directives or alternate, FAA-approved methods of complying with the directives. The FAA later approved the repairs after the airline provided proper documentation that the repairs met safety standards

“Safety is our top priority, and that means holding airlines responsible for the repairs their contractors undertake,” said U.S. Transportation Secretary Anthony Foxx. “Everyone has a role to play and a responsibility to ensure the safety of our transportation system.”

During its investigation, the FAA found that ATS workers applied sealant beneath the new skin panels but did not install fasteners in all of the rivet holes during the timeframe for the sealant to be effective. This could have resulted in gaps between the skin and the surface to which it was being mounted. Such gaps could allow moisture to penetrate the skin and lead to corrosion. As a result of the improper repairs, these airplanes did not comply with Federal Aviation Regulations.

The FAA also alleges that ATS personnel failed to follow requirements to properly place these airplanes on jacks and shore them up while the work was being performed. If a plane is shored improperly during skin replacement, the airframe could shift and lead to subsequent problems with the new skin.

In the third case, the FAA alleges that Southwest Airlines failed to properly install a ground wire on water drain masts on two of its Boeing 737s in response to an FAA Airworthiness Directive addressing lightning strikes on these components. As a result, the aircraft were not in compliance with Federal Aviation Regulations. The airplanes were each operated on more than 20 passenger flights after Southwest Airlines became aware of the discrepancies but before the airline corrected the problem.

“The FAA views maintenance very seriously, and it will not hesitate to take action against companies that fail to follow regulations,” said FAA Administrator Michael Huerta.

Southwest Airlines has 30 days from the receipt of the FAA’s Civil Penalty letter to respond to the allegations.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-3H4 N363SW (msn 26574) prepares to land at Baltimore/Washington (BWI).

Southwest Airlines:

Southwest reports record second quarter net income of $485 million

Southwest Airlines Company (Southwest Airlines and AirTran Airways) (Dallas) today reported its second quarter 2014 results:

Record quarterly net income, excluding special items*, of $485 million, or $.70 per diluted share, compared to second quarter 2013 net income, excluding special items, of $274 million, or $.38 per diluted share. This exceeded the First Call consensus estimate of $.61 per diluted share.

Record quarterly net income of $465 million, or $.67 per diluted share, which included $20 million (net) of unfavorable special items, compared to second quarter 2013 net income of $224 million, or $.31 per diluted share, which included $50 million (net) of unfavorable special items.

Record quarterly operating income of $775 million. Excluding special items, record quarterly operating income of $819 million, resulting in a 16.3 percent operating margin**.

Return on invested capital*, before taxes and excluding special items, for the 12 months ended June 30, 2014, of 17.1 percent, as compared to 8.5 percent for the 12 months ended June 30, 2013.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated:

“We are very pleased with our strong second quarter earnings performance. Net income, excluding special items, of $485 million, or $.70 per diluted share, represents our fifth consecutive quarter of record profits. The successful execution of our strategic initiatives continues to contribute significantly to these record profits. Second quarter 2014 total operating revenues reached an all-time quarterly high of $5.0 billion, benefiting from an 8.5 percent year-over-year increase in passenger revenues. Also, we were very pleased with our cost performance. Operating expenses benefited from our strategic initiatives, as well, and were comparable to second quarter last year.

“My hearty congratulations and thanks go to our hard-working and dedicated Employees for our outstanding second quarter results, which resulted in record quarterly profitsharing expense of $127 million. Over the last twelve months, our exceptional earnings performance, combined with our actions to prudently manage our invested capital, produced a 17.1 percent pre-tax return on invested capital, excluding special items (ROIC). This positions us well to meet or exceed our 15 percent pre-tax ROIC target for full year 2014.

“Our network development and optimization efforts continue, and we are very pleased with the performance across our system. Second quarter load factor and passenger revenue yield were records, even with a large percentage of the route system in the conversion or development stage. We announced our initial nonstop offerings from Dallas Love Field with the upcoming sunset of the Wright Amendment restrictions on October 13, and nearly tripled the flights we currently offer at Reagan National Airport, effective November 2 this year. On July 1, we inaugurated international service on Southwest Airlines, with flights to Oranjestad, Aruba; Montego Bay, Jamaica; and Nassau/Paradise Island in The Bahamas. We plan to fully convert AirTran’s remaining international markets and domestic flying by the end of this year. We expect roughly flat 2014 available seat miles, year-over-year, and intend to expand the network in a disciplined manner. For 2015, we currently expect our available seat miles to increase, year-over-year, largely driven by a two to three percent growth in seats from the upgauging of our fleet, along with a higher percentage of our fleet in revenue service post-integration.

“During second quarter, we announced the selection of Amadeus to implement the Altéa reservations solution to support our domestic network, following the successful implementation of Amadeus’ international solution this year. This allows us to replace the legacy reservation system used by Southwest. The AirTran reservation system is expected to be retired at this year’s end.

“Our balance sheet, liquidity, and cash flows remain strong. At the end of second quarter 2014, we had $4.0 billion in cash and short-term investments. For first half 2014, net cash provided by operations was $2.46 billion, and capital expenditures were $907 million, resulting in strong free cash flow* of $1.55 billion. We repaid $119 million in debt and capital lease obligations during first half 2014, and intend to repay an additional $440 million in debt and capital lease obligations in the second half of this year. Thus far this year, we have returned $652 million to Shareholders through the payment of $97 million in dividends and the repurchase of $555 million in common stock. As always, we are committed to maintaining our financial strength and enhancing value to our Shareholders.”

Financial Results and Outlook

The Company’s second quarter 2014 total operating revenues increased 7.9 percent, while operating unit revenues increased 8.4 percent, on a 0.4 percent decrease in available seat miles and a 2.2 percent increase in average seats per trip, all as compared to second quarter 2013. Second quarter 2014 passenger revenues were $4.8 billion, which was an increase of 9.0 percent on a unit basis, as compared to second quarter 2013. A change to previously recorded estimates of tickets expected to spoil in the future resulted in additional passenger revenue of $47 million in second quarter 2014.

Thus far, July passenger revenue trends and bookings are strong. Based on these trends, and considering the strength of the year-ago comparison, the Company expects July 2014 passenger unit revenues to increase in the three percent range, as compared to July 2013.

Total operating expenses in second quarter 2014 increased 0.6 percent to $4.2 billion, as compared to second quarter 2013. Second quarter 2014 profitsharing expense was a record $127 million, compared to $78 million in second quarter 2013. The Company incurred costs (before profitsharing and taxes) associated with the acquisition and integration of AirTran, which are special items, of $38 million during second quarter 2014, compared to $26 million in second quarter 2013. Cumulative costs associated with the acquisition and integration of AirTran, as of June 30, 2014, totaled $466 million (before profitsharing and taxes). The Company expects total acquisition and integration costs to be approximately $550 million (before profitsharing and taxes). Excluding special items in both periods, total operating expenses in second quarter 2014 increased 0.7 percent to $4.2 billion, as compared to second quarter 2013.

Second quarter 2014 economic fuel costs were $3.02 per gallon, including $.05 per gallon in favorable cash settlements from fuel derivative contracts, compared to $3.06 per gallon in second quarter 2013, including $.05 per gallon in unfavorable cash settlements from fuel derivative contracts. Based on the Company’s fuel derivative contracts and market prices as of July 21, 2014, third quarter 2014 economic fuel costs are expected to be in the $2.95 to $3.00 per gallon range, compared to third quarter 2013’s economic fuel costs of $3.06 per gallon. As of July 21, 2014, the fair market value of the Company’s hedge portfolio through 2018 was a net asset of $381 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding fuel and oil expense, profitsharing, and special items in both periods, second quarter 2014 operating costs increased 1.1 percent from second quarter 2013, and increased 1.7 percent on a unit basis. Based on current cost trends, and excluding fuel and oil expense, profitsharing, and special items, the Company expects a year-over-year increase in its third quarter 2014 unit costs, comparable to the second quarter 2014 year-over-year increase.

Operating income in second quarter 2014 was $775 million, compared to $433 million in second quarter 2013. Excluding special items, operating income was $819 million in second quarter 2014, compared to $479 million in the same period last year, a 71.0 percent increase year-over-year.

Other expenses in second quarter 2014 were $29 million, compared to $70 million in second quarter 2013. The $41 million decrease primarily resulted from $3 million in other losses recognized in second quarter 2014, compared to $47 million recognized in second quarter 2013. In both periods, these losses included ineffectiveness and unrealized mark-to-market amounts associated with a portion of the Company’s fuel hedging portfolio, which are special items. Excluding these special items, second quarter 2014 had $15 million in other losses, compared to $12 million in second quarter 2013, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Third quarter 2014 premium costs related to fuel derivative contracts are currently estimated to be $15 million, compared to $22 million in third quarter 2013. Net interest expense in second quarter 2014 was $26 million, compared to $23 million in second quarter 2013.

For the six months ended June 30, 2014, total operating revenues increased 5.2 percent to $9.2 billion, while total operating expenses decreased 0.4 percent to $8.2 billion, resulting in operating income of $991 million, compared to $503 million for the same period last year. Excluding special items, operating income was $1.1 billion for first half 2014, compared to $591 million for first half 2013.

Net income for first half 2014 was $617 million, or $.88 per diluted share, compared to $283 million, or $.39 per diluted share, for the same period last year. Excluding special items, net income for first half 2014 was $611 million, or $.87 per diluted share, compared to $328 million, or $.45 per diluted share, for the same period last year.

Balance Sheet and Cash Flows

As of June 30, 2014, the Company had $4.0 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion. Net cash provided by operations during second quarter 2014 was $1.34 billion, and capital expenditures were $500 million, generating strong free cash flow of $838 million. The Company repaid $73 million in debt and capital lease obligations during second quarter 2014.

During second quarter 2014, the Company returned $282 million to its Shareholders through the payment of $42 million in dividends and the repurchase of $240 million in common stock, or 7.6 million shares. The Company completed its previous $1.5 billion share repurchase program with the repurchase of $20 million in common stock in early May. On May 14, 2014, the Company’s Board of Directors authorized a new $1 billion share repurchase program, along with a 50 percent increase in the Company’s quarterly dividend. Under the new $1 billion share repurchase program, the Company repurchased an additional $220 million in common stock during second quarter 2014, including $200 million repurchased under an accelerated share repurchase program with a third party financial institution. During second quarter 2014, pursuant to the accelerated share repurchase program, the Company advanced $200 million to the financial institution and received six million shares of the Company’s common stock, representing an estimated 75 percent of the shares the Company expects to purchase under the accelerated share repurchase program. The specific number of shares that the Company ultimately will repurchase under the accelerated share repurchase program will be determined generally based on a discount to the volume-weighted average price per share of the Company’s common stock during a calculation period to be completed during third quarter 2014. At settlement, under certain circumstances, the third party financial institution may be required to deliver additional shares of common stock to the Company, or under certain circumstances, the Company may be required to deliver shares of its common stock or may elect to make a cash payment to the third party financial institution. Pursuant to the settlement of the $200 million accelerated share repurchase program executed in first quarter 2014, the Company received an additional 1.7 million shares in common stock during second quarter 2014, bringing the total shares repurchased under the first quarter accelerated share repurchase program to 8.6 million.

Fleet

During second quarter 2014, the Company’s fleet increased by seven to 683 aircraft at period end. This reflects the second quarter 2014 delivery of 12 new Boeing 737-800s and three pre-owned Boeing 737-700s, as well as the retirement of one Boeing 737-500. In addition, the Company removed seven Boeing 717-200s from service during second quarter 2014 in preparation for transition out of the fleet.

Boeing 737 NG Delivery Schedule:

Southwest 737NG Delivery Schedule 7.2014 (LRW)

Notes:

*Additional information regarding special items is included in the accompanying reconciliation tables, and see Note Regarding Use of Non-GAAP Financial Measures.
**Operating margin, excluding special items, is calculated as operating income, excluding special items, divided by operating revenues.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-7H4 N280WN (msn 32533) in the Penguin One special livery arrives in Los Angeles.

Southwest Airlines: AG Slide Show

AirTran Airways: AG Slide Show

Southwest Airlines adds the Cartoon Network

Cartoon Network logo (large)

Southwest Airlines (Dallas) in a move that will excite your kids, along with the Turner Broadcasting System, Inc. announced today it will add Cartoon Network to the carrier’s inflight entertainment portal, which streams free live television programming to passengers’ WiFi-equipped personal electronic devices at all phases of flight, compliments of DISH®. Content from Cartoon Network’s popular programming such as Adventure Time, Regular Show, The Amazing World of Gumball, and Ben 10 Omniverse is now available for inflight viewing. Cartoon Network is the airline’s first complete child-centric programming being offered onboard all Southwest WiFi-equipped aircraft, representing nearly 80 percent of the airline’s fleet. The streaming TV service is provided through leading inflight content and connectivity partner Global Eagle Entertainment Inc. Cartoon Network programming is being provided by Turner Private Networks, a subsidiary of Turner Broadcasting that creates and distributes content for out-of-home networks.

Southwest Airlines: AG Slide Show

SWAPA applauds the Dreamjet decision by the DOT but still opposes the Norwegian Air International application

SWAPA logo

The Southwest Airlines Pilots’ Association (SWAPA) (Dallas), the union representing the pilots of Southwest Airlines, issued this statement:

The Southwest Airlines Pilots’ Association (SWAPA) commends the United States Department of Transportation (DOT) for granting an exemption to Dreamjet, a startup airline, based in France within the European Union (EU).

“The rapid approval of Dreamjet’s application is applauded by the pilots of Southwest Airlines,” said Captain Paul Jackson, SWAPA Governmental Affairs Chairman. “We agree with the DOT that Dreamjet is fit to serve the EU-US market under the terms of the Open Skies agreement.”

This approval for Dreamjet is in contrast to the application for a foreign carrier exemption on file with the DOT by Norwegian Air International (NAI). The pilots of Southwest Airlines have opposed the application of NAI from early in the process based on their flag of convenience strategy and usurping of labor laws with the offshoring of crews.

“We continue to oppose NAI and at the same time applaud the DOT for recognizing EU carriers that comply with the rules and grant them entry to a fair and equitable market,” Jackson continued.

Dreamjet is set to launch five weekly flights between Paris-Charles de Gaulle and Newark Liberty Airport on July 11 with a Boeing 757-200 configured with 74 business class seats.

Note: Dreamjet has now been renamed La Compagnie.

Southwest Airlines starts international flights today

Southwest Airlines (Dallas) today (July 1) launched an international service by inaugurating service to three Caribbean destinations from three of its US gateway cities. Southwest Airlines’ first international departure, flight WN 1804 from Baltimore/Washington to Oranjestad, Aruba, departed on time at 8:30 am EDT, closely followed by Southwest flight WN 906 to Montego Bay, Jamaica, where its first-ever scheduled international arrival was planned for just after 11 am EDT. A midday flight from Baltimore/Washington to Nassau/Paradise Island also brings Southwest Airlines to The Bahamas.

Customers on the carrier’s inaugural international flights from Baltimore/Washington joined those in two other gateway cities of Atlanta, and Orlando who celebrated alongside Employees with commemorative beach balls, snorkels and masks.

At the Company’s corporate headquarters in Dallas, Employees staffed a command center in the pre-dawn hours to monitor operational performance and new technology systems developed in partnership with Amadeus, a leading technology provider to the global travel industry. Its Altea suite of technology solutions is powering Southwest’s reservations, inventory, and departure control functions for international flying.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-8H4 N8633A (msn 36905) with the new Aviation Partners Boeing Split Scimitar Winglets arrives at Baltimore-Washington International Thurgood Marshall Airport (BWI).

Southwest Airlines: AG Slide Show

Southwest is trying to improve its on-time average with better aircraft scheduling

Southwest Airlines (Dallas) used to be always near the top for on-time performance. Not any more. As the airline grew to become the largest domestic carrier in the United States that has all changed.

According to this article by Bloomberg Businessweek, “Southwest has ranked near the bottom of the U.S. Department of Transportation’s monthly tally of airline on-time performance for much of the past year, with only 72.9 percent of its flights arriving on schedule during the 12 months through April 30.”

For the August and beyond schedule period, Southwest is tweaking its schedule to improve its performance.

In the past, Southwest purposely avoided congested major airports but that too has changed as it has now entered most of the top markets in the United States and soon will fly to more overseas destinations.

Read the full article: CLICK HERE

Copyright Photo: Brian McDonough/AirlinersGallery.com. Southwest in the past celebrated its high scores in the top three indexes of passenger satisfaction (best on-time performance, best baggage handling and fewest customer complaints) with it special “Triple Crown” livery on Boeing 737-3H4 N647SW (msn 27717).

Southwest Airlines: AG Slide Show

Southwest Airlines selects Boeing’s “Airplane Health Management” program

Boeing (Chicago and Seattle) has announced Southwest Airlines (Dallas) has selected Boeing Airplane Health Management (AHM) to enhance operational efficiency in its maintenance and engineering operations.

Southwest Airlines will use Airplane Health Management to collect and evaluate airplane operations data while the airplane is in flight. This real-time data is used to signal ground operations crews of any potential maintenance issues before the airplane lands, minimizing flight schedule disruptions and maintenance-related delays.

Boeing technical teams will work with Southwest to facilitate initial deployment of the system for its Next-Generation 737s. Southwest is Boeing’s 66th customer for Airplane Health Management.

According to Boeing, “Boeing Airplane Health Management is a powerful, data-driven capability used worldwide by airplane operators and maintenance, repair and overhaul providers (MROs) to proactively manage the serviceability of airplanes and fleets. It is designed to interface with existing airplane systems and communication infrastructure, using state-of-the-art airplane and ground technology to address day-of-operation disruptions, help predict future operations events and prevent unplanned maintenance and schedule interruptions.”

Airplane Health Management is part of an integrated suite of aviation services marketed as the Boeing Edge. These include parts, training, engineering, maintenance and software solutions that increase the efficiency and profitability of airlines and leasing companies.

Southwest Airlines is an all-Boeing carrier and operates the largest 737 fleet of any airline. In 2011, the airline became the launch customer for the 737 MAX.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-7H4 N214WN (msn 32486) in the special “Maryland One” state theme arrives at Los Angeles International Airport.

Southwest Airlines: AG Slide Show

Southwest converts more flights at Akron-Canton

Southwest Airlines (Dallas) has converted four more destinations and added flights from Akron-Canton Airport (CAK). Southwest, the busiest airline operating out of CAK, now offers eight daily nonstop flights from the airport. Destinations with new or additional Southwest service from Akron-Canton include Boston (Logan), New York (LaGuardia), Orlando and Denver (a second seasonal round trip). To celebrate the largest single conversion from AirTran Airways to Southwest Airlines, CAK and Southwest officials will hold a British invasion themed press conference and all day long gate party on June 9. A Beatles® cover band, balloon twisting, trivia contest and colossal #CAKFab4 destinations display will greet customers as the depart and arrive throughout the day.

Southwest Airlines will take over all routes to/from CAK on November 2, 2014 as well as adding a daily nonstop flight to Ronald Reagan Washington National Airport. The last AirTran Airways flight from CAK will be to Atlanta on November 1.

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 N449WN (msn 32469) arrives in Las Vegas.

Southwest Airlines: AG Slide Show

AirTran Airways: AG Slide Show

Southwest rolls out mobile boarding passes nationwide

Southwest Airlines (Dallas) today (May 28) announced mobile boarding passes are now available for Customers traveling throughout the United States. Today’s announcement marks the completion of the domestic rollout of the technology that will make getting through the airport quicker and greener. With the airline’s mobile boarding passes, Customers can use their smartphones or other electronic devices to get through security checkpoints and to board their aircraft.

Testing began in the fall of 2013 in Austin, followed by successful pilot programs in Houston and Dallas.

According to the airline, “This announcement comes on the heels of an update last week to their iOS and Android apps adding information about upcoming trips to the homepage. Customers can now quickly view the information that matters most while traveling, like flight status, boarding position, and gate information. Travel information will update in the app beginning 24 hours prior to a flight allowing Customers to check in and access their mobile boarding pass from the homepage”.

Copyright Photo: Tony Storck/AirlinersGallery.com. Boeing 737-8H4 N8306H (msn 36983) with the new Aviation Partners Boeing Split Scimitar Winglets approaches the runway at the Baltimore/Washington (BWI) hub.

Southwest Airlines:

Boeing today surpasses 2,000 orders for the new 737 MAX

B

Boeing (Chicago and Seattle) celebrated a milestone achievement today (May 20) on the 737 MAX program, surpassing the 2000th order for the super-efficient single-aisle airplane. With the addition of 30 orders from unidentified customers this week, the 737 MAX now has a total of 2,010 orders from 39 customers worldwide, valued at $209 billion at list prices. The 737 MAX also has commitments for more than 250 additional airplanes.

The 737 MAX has reached 2,000 orders faster than any other Boeing airplane in history. This unprecedented demand is fueled by air traffic growth and the need for more fuel-efficient airplanes.

According to Boeing, “the 737 MAX will be 14 percent more fuel-efficient than today’s most efficient Next-Generation 737s – and 20 percent better than the original Next-Generation 737s when they first entered service. The 737 is more fuel efficient than the A320 today and will be more fuel efficient than the A320neo tomorrow. Airlines operating the 737 MAX will see an 8 percent operating cost per seat advantage over the A320neo”.

On track to begin final assembly in mid-2015, the 737 MAX will fly in 2016 and will be delivered to launch customer Southwest Airlines in the third quarter of 2017.

Image: Boeing.

Southwest Airlines announces new routes from Dallas and Washington’s Reagan National Airport, Mexico City and AirTran Airways final flight on December 28

Southwest Airlines (Dallas) adding to what we previously reported, today published dozens of new nonstop markets for Customers flying the carrier from Dallas Love Field and Ronald Reagan Washington National Airport. The schedule also includes new Southwest Airlines service to an additional Caribbean destination—Punta Cana, Dominican Republic—as well as to North America’s largest metropolitan area, Mexico City (replacing AirTran Airways).

New, nonstop service for Dallas Love Field:

Beginning October 13, 2014, Southwest will offer nonstop service between Dallas and:

Baltimore/Washington (three roundtrips a day)
Chicago Midway (five roundtrips a day, up to six as of November 2)
Denver (three roundtrips a day)
Las Vegas (three roundtrips a day, up to four as of November 2)
Los Angeles (three roundtrips a day, up to four as of November 2)
Orlando (two roundtrips a day, up to three as of November 2)
Washington Reagan National (three roundtrips a day, up to six as of November 2)

Beginning November 2, 2014, Southwest will offer nonstop service between Dallas and:

Atlanta (four roundtrips a day)
Fort Lauderdale/Hollywood (two roundtrips a day)
Nashville (two roundtrips a day)
New York LaGuardia (three roundtrips a day)
Phoenix (four roundtrips a day)
San Diego (two roundtrips a day)
Santa Ana/Orange County (one roundtrip a day)
Tampa (two roundtrips a day)

Southwest Airlines also announced today new nonstop service between Washington Reagan National Airport and both Akron/Canton and Indianapolis beginning on November 2, 2014, increasing the carrier’s service at Reagan National from a present day offering of 17 departures to 44 departures a day by year’s end to a total 14 destinations: Atlanta, Akron/Canton, Austin, Chicago Midway, Dallas Love Field, Houston Hobby, Fort Myers, Indianapolis, Kansas City, Milwaukee, Nashville, New Orleans, St. Louis, and Tampa.

Southwest Airlines also will add new nonstop service between Washington Dulles and both Las Vegas and San Diego, and to existing nonstop destinations of Chicago Midway and Denver.

Southwest Airlines continues its historic launch of international service with two additional destinations—Mexico City and Punta Cana, Dominican Republic—to be added on November 2, 2014, to the carrier’s network map of more than 90 destinations across five countries in North America and the Caribbean.

AirTran Airways will be fully integrated into Southwest Airlines by the end of 2014:

AirTran Airways flight 1 (Southwest 5001) will operate on Sunday, December 28, 2014, as the carrier’s final scheduled departure. The evening flight from Atlanta Hartsfield-Jackson International Airport to Tampa reprises the first flight the carrier operated on October 26, 1993 (as ValuJet). Southwest Airlines Company announced its acquisition of AirTran Airways in September 2010, and closed the transaction on May 2, 2011. The FAA awarded the Company a single operating certificate for the two carriers on March 1, 2012, and the Company plans to close 2014 with wholly owned subsidiary AirTran fully-integrated into Southwest Airlines serving a network of 93 destinations in five countries.

Copyright Photo: Marcelo F. De Biasi/AirlinersGallery.com. Goodbye AirTran Airways. We now have the date when AirTran Airways will operate its last flight – December 28, 2014. The sun will set for AirTran in Tampa on that Sunday in December. Last flight 5001 is due to be operated with a 117-seat Boeing 717-200 (going to Delta on lease) departing ATL at 10:25 pm (2225) and arriving in TPA at 11:55 pm (2355). AirTran’s Boeing 717-2BD N996AT (msn 55140) soars into the sky at Washington’s Reagan National Airport (DCA).

AirTran Airways: AG Slide Show

Southwest Airlines: AG Slide Show

 

 

Southwest’s board approves an increase in the dividend and a $1 billion stock repurchase program

Southwest Airlines (Dallas) announced its Board of Directors, at its meeting held today (May 14), increased the Company’s quarterly dividend by 50 percent and authorized a new $1 billion share repurchase program. Under the new $1 billion share repurchase authorization, an initial $200 million of Southwest common stock will be repurchased under an accelerated share repurchase program. The quarterly dividend will increase to $.06 per share from $.04 per share, beginning with the 151st consecutive quarterly dividend declared today to Shareholders of record at the close of business on June 4, 2014 on all shares then issued and outstanding. The dividend will be paid on June 25, 2014. Annualized, this increased dividend amounts to over $160 million based on approximately 692 million1 shares of common stock outstanding.

Gary C. Kelly, Chairman of the Board, President, and CEO, stated: “The actions taken today by our Board are in recognition of our strong financial position and performance, strong cash flow outlook, and dedication to returning value to our Shareholders. The Board authorized an increase in our quarterly dividend payment to $.06 per share from $.04 per share. Based on yesterday’s closing stock price of $24.98, this would provide an approximate one percent annual dividend yield to our Shareholders. The Board also authorized a new $1 billion share repurchase program. Last week, we completed our previous total $1.5 billion share repurchase authorization, bringing the cumulative return to Shareholders through share repurchases and dividends, since August 2011, to approximately $1.7 billion.

“Today’s announcement enables us to further Southwest’s long-standing commitment to deploy capital back to our Shareholders, while preserving our financial strength. We have maintained an investment-grade credit rating for over 30 years, the only U.S. airline with such a distinction. Our balance sheet and liquidity remain strong with cash and short-term investments of approximately $3.7 billion1, and a fully available unsecured revolving credit line of $1 billion. As of April 30, 2014, we have reduced our debt and capital lease obligations, net, by approximately $1.5 billion since the acquisition of AirTran, and intend to repay an additional $470 million in debt and capital lease obligations for the remainder of this year.

“With the upcoming repeal of the Wright Amendment, launch of international service, launch of service from the additional slots acquired at New York’s LaGuardia Airport and Reagan Washington National Airport, and the planned completion of the AirTran integration, 2014 is a monumental year for Southwest and our Shareholders. We are very pleased with the successful execution of our major strategic initiatives thus far, which have contributed significantly to our profits. The momentum from our record first quarter 2014 results continued into April, with strong traffic and revenue trends. Based on these trends and our current outlook, we are on track with our plan to achieve a 15 percent pre-tax return on invested capital, excluding special items, this year.”

As of May 9, 2014, the Company completed its previous total $1.5 billion share repurchase authorization, including $200 million, or approximately 8.6 million shares, under an accelerated share repurchase program launched in February 2014. Under the total $1.5 billion share repurchase authorization, the Company repurchased approximately 126 million shares, which has reduced its shares outstanding by over 15 percent since August 2011. The Company intends to execute an agreement today to implement a new $200 million accelerated share repurchase program. The remaining $800 million of authorized share repurchases under the new program will be made in accordance with applicable securities laws in open market, private, or accelerated repurchase transactions from time to time, depending on market conditions, but may be discontinued at any time.

Copyright Photo: Bruce Drum/AirlinersGallery.com. Boeing 737-8H4 N8305E (msn 36683) taxies to the runway at Seattle-Tacoma International Airport. On April 9, 2014 operated its first revenue flight utilizing a Boeing 737-800 equipped with Aviation Partner’s Boeing Split Scimitar Winglets. The newly designed winglet differs than those currently installed on the carrier’s fleet of Boeing 737s, with aerodynamic scimitar tips and a large ventral strake on the bottom of the blended winglet structure. By upgrading the 737-800s with Split Scimitar Winglets, annual fuel savings are estimated to increase from approximately 3.5 percent per aircraft from Blended Winglets to approximately 5 to 5.5 percent per aircraft annually. In addition, the new winglet will reduce emissions, supporting Southwest’s commitment to the environment. The Split Scimitar Winglets will be installed on 33 new 737-800s once they are delivered to the airline this year. The airline also plans to retrofit 52 additional 737-800s currently in the fleet. The retrofits are expected to be completed by early 2015. All of the carrier’s Boeing 737-700s and 737-800s, as well as a majority of its 737-300s, are equipped with Blended Winglets saving the company roughly 55 million gallons of fuel annually. Blended Winglets were first installed on Southwest Airlines Boeing 737s in 2007.

Southwest Airlines: AG Slide Show

Virgin America wins the battle for two gates at Dallas’ Love Field

Virgin America (San Francisco) has won the “Battle of Dallas”.

According to the Star-Telegram, Dallas City Manager A.C. Gonzalez stated he would approve an agreement with American Airlines (Dallas/Fort Worth) to transfer its lease on two gates at the city-owned Love Field to Virgin America rather than hometown Dallas-based Southwest Airlines.

Read the full story: CLICK HERE

Previously Virgin America announced it was launching its “new business-friendly flights” from Dallas’ Love Field (DAL) to New York’s LaGuardia Airport (LGA), Ronald Reagan Washington National Airport (DCA), Los Angeles International Airport (LAX) and San Francisco International Airport (SFO). The new flights take off in October 2014.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Airbus A320-214 N839VA (msn 4610) completes the final bank on the River Approach into Washington’s Reagan National Airport (DCA).

Virgin America: AG Slide Show

Virgin America Free Love Field

The Battle of Dallas: Southwest Airlines fights to protect its Love Field turf from “invading” Virgin America despite Sir Richard Branson’s “love letter” to the city

Southwest Airlines (Dallas) according to this article by Bloomberg Businessweek, is playing “hardball” to protect its home turf at Dallas’ downtown Love Field. Upstart Virgin America (San Francisco), as we have reported, wants to sublease two gates at DAL from American Airlines (approved by the DOT) in order to start new service to key coastal markets. Virgin America, if it gains the two gates, with offer inflight amenities that Southwest does not offer its flyers at Love Field. Is Southwest afraid of Virgin America gaining a foothold in DAL?

Virgin America has brought in the “big gun”, i.e. Sir Richard Branson, who has been visiting and urging local leaders to approve the sublease from American Airlines to Virgin America. Branson has also “videoed” a love letter (see video below) to  the city leaders and business interests. Southwest is pushing back claiming it can offer more flights to more markets with the two disputed gates. The city of Dallas will have to decide who gets the lease, either upset the local “hometown” airline or invite in a new strong competitor. There is a battle going on in Dallas that is heating up with the weather. Someone will win this gunfight and someone will lose it. The stakes are high.

Video:

Read the article: CLICK HERE

Copyright Photo: Brian McDonough/AirlinersGallery.com. With “Lone Star One”, Southwest continues to remind Texans it is the airline of Texas, not an airline from the West Coast. Dallas is the new battleground for these two carriers. Who will prevail?

Southwest Airlines: AG Slide Show

Virgin America: AG Slide Show

Southwest picks Amadeus’ Altéa reservations for its domestic operations

Southwest Airlines (Dallas) and Amadeus IT Group announced today that they have entered into a joint contract for Amadeus’ Altéa reservations solution that will support the carrier’s domestic service. Amadeus’ Altéa reservations solution currently supports the Company’s international service, and Southwest has long indicated a desire to operate just one reservation system, operating multiple systems following the acquisition of AirTran Airways (Orlando and Dallas) and the launch of international service on Southwest. After months of due diligence, the airline selected Amadeus’ Altéa solution based on a successful international launch and future capabilities.

Over the next few years, Southwest and Amadeus will partner to move to a single reservation system. Until then, the airline will continue with two reservation platforms after the sunset of the AirTran brand in December 2014. Amadeus is the leading IT provider for the travel and tourism industry with a unique portfolio of new generation solutions and the largest customer base for airline passenger service systems.

After two years of work, Southwest began selling international itineraries in January 2014 using Amadeus’ Altéa reservation solution. The carrier will begin flying those itineraries on July 1, 2014.

Southwest is Amadeus’ largest U.S. airline IT partner in terms of domestic passengers boarded annually. Amadeus has more than 100 airlines on their reservation system—mostly based in Europe, Asia, and Latin America. Once implemented, Southwest will be Amadeus’ largest airline IT partner worldwide in terms of passengers boarded.

Meanwhile Sabre reacted to announcement with this statement:

Sabre Corporation reported that it was notified earlier today by Southwest Airlines of its decision to end the competitive bid process for its future reservations system. Sabre was further notified that the contract has been awarded to a competitor.

Sabre remains under contract to be compensated through December 31, 2016 for continuing to provide reservations services for all domestic flights.

In 2013, Southwest Airlines’ reservations system contributed approximately one percent of total Sabre revenues, and three percent of Adjusted EBITDA.

Sabre’s leading SabreSonic CSS reservation solution is a market leader with strong market momentum. The robust and flexible solution was recently selected by the combined American Airlines and U.S. Airways, the world’s largest airline.

Sabre’s broad portfolio of airline solutions continues to provide opportunity for the Company to work with Southwest going forward through its currently installed solutions, as well as future opportunities.

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 N219WN (msn 32490) arrives at the runway threshold at Las Vegas’ McCarran International Airport (LAS).

Southwest Airlines: AG Slide Show

 

Southwest Airlines Company reports record first quarter net profit of $126 million

Southwest Airlines Company (Southwest Airlines and AirTran Airways) (Dallas) today reported its first quarter 2014 results:

Record first quarter net income, excluding special items*, of $126 million, or $.18 per diluted share, compared to first quarter 2013 net income, excluding special items, of $53 million, or $.07 per diluted share. This exceeded the First Call consensus estimate of $.16 per diluted share.

Record first quarter net income of $152 million, or $.22 per diluted share, which included $26 million (net) of favorable special items, compared to net income of $59 million, or $.08 per diluted share, in first quarter 2013, which included $6 million (net) of favorable special items.

Record first quarter operating income of $215 million; $242 million excluding special items.
Return on invested capital*, before taxes and excluding special items (ROIC), for the 12 months ended March 31, 2014, of 14.2 percent, as compared to 8.3 percent for the 12 months ended March 31, 2013.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “I am delighted to report record first quarter earnings, which increased significantly year-over-year, despite the disruption caused by more than 7,500 of our flights canceled due to extreme weather conditions and the impact of the shift in timing of the Easter and Passover holidays. This outstanding performance was driven by record first quarter operating revenues of $4.2 billion, and a 1.2 percent year-over-year decline in total operating costs, excluding special items, driven largely by lower fuel prices and our ongoing fleet modernization. Our record first quarter operating income of $242 million, excluding special items, was very strong, especially considering an estimated $50 million unfavorable impact from winter storms. Operationally, our Employees did an outstanding job in difficult conditions taking care of our Customers, and I thank them again for their efforts.

“Our first quarter 2014 earnings performance is a superb start to the year and on plan to achieve a 15 percent pre-tax return on invested capital for the year, excluding special items. Second quarter 2014, benefiting from the Easter and Passover holidays, also is off to a great start, with strong bookings, favorable revenue trends, and stable fuel prices.

“Our balance sheet, liquidity, and cash flows remain strong. We are actively managing our debt and total invested capital, while making strategic investments that have already contributed significantly to our record profitability. We were pleased to return $371 million to Shareholders during first quarter 2014 through the payment of $56 million in dividends and the repurchase of $315 million in common stock. Since August 2011, we have returned $1.6 billion to our Shareholders through share repurchases and dividend payments.

“Our five strategic initiatives are on track and meeting or exceeding expectations. In January, we deployed our international reservation system and began selling Southwest’s inaugural international service to Aruba, The Bahamas, and Jamaica, scheduled to begin July 1, 2014. We quickly followed with selling Southwest service to Cancun and Los Cabos, scheduled to begin August 10, 2014. By the end of this year, we intend to fully convert AirTran’s seven international markets, along with its remaining domestic markets, to the Southwest route network. We have converted 21 of the 52 AirTran Boeing 737-700s to the Southwest Evolve configuration, and plan to convert the remaining 31 -700s this year (see below). This will complete the AirTran integration and retire the brand by the end of 2014.

“We have a significant amount of fleet activity planned this year, as we wind down the AirTran brand and continue to modernize our fleet, resulting in a larger than normal number of aircraft out of scheduled service. Accordingly, we expect relatively flat 2014 available seat miles, year-over-year.

“Our network development and optimization results, to date, have been excellent. We are excited about the opportunity to add new service to New York LaGuardia, Washington Reagan National, and Dallas Love Field this year, as well as to the international terminal under construction at Houston Hobby next year. Looking ahead to 2015, while we have not finalized our fleet and capacity plans, we have been managing to a baseline of 695 aircraft, which was our combined fleet at the time of the AirTran acquisition. We are planning year-over-year growth in our available seat miles derived from increased fleet utilization resulting from the completion of the AirTran integration and the increase in seats from the upgauging of our fleet. Of course, this will drive significant unit cost benefits.”

Financial Results and Outlook

The Company’s first quarter 2014 total operating revenues increased 2.0 percent, year-over-year, to $4.2 billion, despite an estimated $45 million reduction to revenues from weather-related cancellations. Operating unit revenues increased 3.1 percent, on a 1.1 percent decrease in available seat miles and a 2.6 percent increase in average seats per trip, all as compared to first quarter 2013. While the shift in the timing of the Easter and Passover holidays impacted March results, April bookings and revenue trends, thus far, are strong. Based on April’s trends and current bookings for the remainder of the second quarter, the Company expects another solid year-over-year increase in its second quarter 2014 operating unit revenues.

Total operating expenses in first quarter 2014 decreased 1.6 percent to $4.0 billion, as compared to first quarter 2013. First quarter 2014 total operating expenses included an estimated $5 million in net costs associated with winter storms. The Company incurred costs (before profitsharing and taxes) associated with the acquisition and integration of AirTran, which are special items, of $18 million during first quarter 2014, compared to $13 million in first quarter 2013. Cumulative costs associated with the acquisition and integration of AirTran, as of March 31, 2014, totaled $428 million (before profitsharing and taxes). The Company expects total acquisition and integration costs to be no more than $550 million (before profitsharing and taxes). Excluding special items in both periods, total operating expenses in first quarter 2014 decreased 1.2 percent to $3.9 billion, as compared to $4.0 billion in first quarter 2013.

First quarter 2014 profitsharing expense was $29 million, compared to $15 million in first quarter 2013. Profitsharing expense in first quarter 2014 was impacted by acquisition and integration costs incurred during that period. In addition, in accordance with the Company’s ProfitSharing Plan (the Plan), first quarter 2014 operating profit, as defined in the Plan, was reduced by a portion of the acquisition and integration costs incurred from April 1, 2011, through December 31, 2013, which will be amortized from January 1, 2014, through December 31, 2018.

First quarter 2014 economic fuel costs were $3.08 per gallon, including $.06 per gallon in favorable cash settlements from fuel derivative contracts, compared to $3.29 per gallon in first quarter 2013, including $.05 per gallon in unfavorable cash settlements from fuel derivative contracts. Based on the Company’s fuel derivative contracts and market prices as of April 21, 2014, second quarter 2014 economic fuel costs are expected to be comparable to second quarter 2013’s economic fuel costs of $3.06 per gallon. As of April 21, 2014, the fair market value of the Company’s hedge portfolio through 2017 was a net asset of approximately $252 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding economic fuel and oil expense, profitsharing, and special items in both periods, first quarter 2014 operating costs increased 2.4 percent from first quarter 2013, and increased 3.5 percent on a unit basis. Based on current cost trends, the Company expects both second quarter 2014 and full year 2014 unit costs, excluding fuel and oil expense, profitsharing, and special items, to increase, year-over-year, in the two to three percent range.

Operating income for first quarter 2014 was $215 million, compared to $70 million in first quarter 2013. Excluding special items, operating income was $242 million in first quarter 2014, compared to $112 million in the same period last year.

Other income in first quarter 2014 was $29 million, compared to $24 million in first quarter 2013. The $5 million increase primarily resulted from $53 million in other gains recognized in first quarter 2014, compared to $46 million recognized in first quarter 2013. In both periods, these gains primarily resulted from unrealized mark-to-market net gains associated with a portion of the Company’s fuel hedging portfolio, which are special items. Excluding these special items, first quarter 2014 had $16 million in other losses, compared to $5 million in first quarter 2013, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Second quarter 2014 premium costs related to fuel derivative contracts are currently estimated to be in the $15 million to $20 million range, compared to $12 million in second quarter 2013. Net interest expense in first quarter 2014 was $24 million, compared to $22 million in first quarter 2013.

Balance Sheet and Cash Flows

As of April 23, 2014, the Company had approximately $3.5 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion. Net cash provided by operations during first quarter 2014 was $1.1 billion, and capital expenditures were $407 million, which included the payment for slots acquired at Washington’s Reagan National Airport. The Company repaid $46 million in debt and capital lease obligations during the first quarter 2014, and intends to repay approximately $500 million in debt and capital lease obligations during the remainder of 2014, which includes $35 million paid on April 1, 2014, associated with eight of the Company’s Fixed-rate Boeing 717 Aircraft Notes due in 2017.

During first quarter 2014, the Company generated free cash flow* of $712 million. The Company returned approximately $371 million to its Shareholders through the payment of $56 million in dividends and the repurchase of $315 million in common stock, or 12 million shares, under its share repurchase program, including $200 million under an accelerated share repurchase program with a third party financial institution. In first quarter, pursuant to the accelerated share repurchase program, the Company advanced $200 million to the financial institution and received approximately seven million shares of the Company’s common stock, representing an estimated 75 percent of the shares the Company expects to purchase under the accelerated share repurchase program. The specific number of shares that the Company ultimately will repurchase under the accelerated share repurchase program will be determined generally based on a discount to the volume-weighted average price per share of the Company’s common stock during a calculation period to be completed by May 9, 2014. At settlement, under certain circumstances, the third party financial institution may be required to deliver additional shares of common stock to the Company, or under certain circumstances, the Company may be required to deliver shares of its common stock or may elect to make a cash payment to the third party financial institution. Since August 2011, the Company has repurchased $1.48 billion in common stock, or 124 million shares, under its $1.5 billion share repurchase authorization.

Fleet

During first quarter 2014, the Company’s fleet was reduced by five to 676 aircraft at period end. This reflects the first quarter 2014 delivery of two new Boeing 737-800s and six pre-owned Boeing 737-700s, as well as the retirement of one Boeing 737-300. In addition, the Company removed 12 Boeing 717-200s from service during first quarter 2014 in preparation for transition. Additional information regarding the Company’s aircraft delivery schedule is included in the accompanying tables.

Southwest 737-700 Fleet Table

Read the analysis by Bloomberg Businessweek: CLICK HERE

Top Copyright Photo: Brian McDonough/AirlinersGallery.com. Southwest’s Boeing 737-7H4 N214WN (msn 32486) completes its final turn on the river approach into Washington’s Reagan National Airport (DCA).

Southwest Airlines: AG Slide Show

AirTran Airways: AG Slide Show

Bottom Copyright Photo: Ton Jochems/AirlinersGallery.com. AirTran’s Boeing 737-7BD N315AT (msn 35788) completes its final approach to the runway at Los Angeles International Airport (LAX).

 

AirTran Airways Captain Mike “Mad Dog” Watson retires, how to de-ice a Boeing 737

AirTran Airways (subsidiary of Southwest Airlines) Captain Mike “Mad Dog” Watson on his retirement flight. Mad Dog has been flying for over 52 years, and is best known for his legendary preflight announcements singing “Bad to the Bone” while playing his harmonica. Captain Watson was also recipient of the 2000 AirTran Excellence Award for his heroic efforts during an inflight emergency earlier that year.

Congratulations Mad Dog.

Top Video: Southwest Airlines.

AirTran Airways: AG Slide Show

Southwest Airlines: AG Slide Show

Bottom Video: Southwest Airlines. How to de-ice a Boeing 737:

 

Southwest Airlines to distribute $228 million in profit sharing

Southwest Airlines (Dallas) has announced it will contribute approximately $228 million—the largest total dollar amount ever allocated—directly to Employees through its ProfitSharing Plan this year. The payment is an 88 percent increase over last year’s contribution of $121 million. Southwest was the first in the industry to offer a ProfitSharing Plan, and this is the Company’s 40th consecutive ProfitSharing payment. Through the ProfitSharing Plan, Southwest Employees currently own more than four percent of the Company’s outstanding shares.

Combined with ProfitSharing is the Company’s $269 million match and other amounts contributed to the Southwest and AirTran 401(k) plans. Southwest rewarded its Employees with a 2013 total retirement benefit of nearly $500 million. In addition to retirement contributions, Southwest Airlines also invested approximately $580 million in its Employees’ benefits during 2013, which included healthcare coverage, wellness programs, and other benefits. In total, that’s more than $1 billion dedicated to the wealth and wellbeing of Southwest Employees in 2013 alone, on top of base salaries.

Over four decades, Southwest ProfitSharing contributions have totaled $2.5 billion. In other words:

It’s enough money to buy 500 million mini bottles of founder Herb Kelleher’s drink of choice, Wild Turkey, which would fill 10 Olympic-sized swimming pools.
Or, $2.5 billion would buy 83 billion bags of Southwest peanuts—enough for 10 roundtrips to the moon if you lined them up end-to-end.

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 N481WN (msn 29853) prepares to touch down in Las Vegas.

Southwest Airlines: AG Slide Show

Southwest starts operating its first Boeing 737-800 with Split Scimitar Winglets

Southwest 737-800 SSWL N8624J (Winglets-1)(Southwest)(LR)

Southwest Airlines (Dallas) yesterday (April 9) operated its first revenue flight utilizing a Boeing 737-800 equipped with Aviation Partner’s Boeing Split Scimitar Winglets. The newly designed winglet differs than those currently installed on the carrier’s fleet of Boeing 737s, with aerodynamic scimitar tips and a large ventral strake on the bottom of the blended winglet structure. By upgrading the 737-800s with Split Scimitar Winglets, annual fuel savings are estimated to increase from approximately 3.5 percent per aircraft from Blended Winglets to approximately 5 to 5.5 percent per aircraft annually. In addition, the new winglet will reduce emissions, supporting Southwest’s commitment to the environment.

Southwest Airlines takes delivery of its first 737-800 with Spli

The Split Scimitar Winglets will be installed on 33 new 737-800s once they are delivered to the airline this year. The airline also plans to retrofit 52 additional 737-800s currently in the fleet. The retrofits are expected to be completed by early 2015. All of the carrier’s Boeing 737-700s and 737-800s, as well as a majority of its 737-300s, are equipped with Blended Winglets saving the company roughly 55 million gallons of fuel annually. Blended Winglets were first installed on Southwest Airlines Boeing 737s in 2007.

Copyright Photos: Southwest Airlines. Brand new Boeing 737-8H4 N8624J (msn 37004) was delivered to the company on March 26, 2014.

Southwest Airlines: AG Slide Show

 

Southwest to partner with Placemaking for its “Project for Public Spaces”, WSJ takes a look at “aging” Southwest

Southwest Airlines (Dallas) announced on April 3 a multi-year commitment to Placemaking – a movement that reimagines public spaces as the heart of every community. Through the Southwest Airlines Heart of the Community program, the airline will revitalize and activate public spaces in the hearts of American cities in partnership with the pioneering nonprofit organization behind Placemaking, Project for Public Spaces (PPS).

Building upon successful pilot projects in Detroit, Michigan, and Providence, Rhode Island, in 2013, Southwest and PPS will help transform multiple public spaces in 2014 with the intent to expand the Heart of the Community program and support dozens of public spaces through Placemaking projects in the years to come.

For more than 30 years, Placemaking has sparked social, economic, and environmental benefits in communities around the world. Rooted in community-based participation, Placemaking involves the planning, design, management and programming of public spaces and capitalizes on a community’s assets and potential to create vibrant destinations—such as neighborhood parks, community markets and downtown squares.

In late 2013, Southwest provided a gift to support the MIT Department of Urban Studies and Planning’s research white paper, Places in the Making, which demonstrated the power of Placemaking to create connected, sustainable, healthy, and economically viable communities. The research emphasized Placemaking’s positive impact on community building and empowerment and cited the need for public/private partnerships to advance the practice of Placemaking.

Through the Heart of the Community program, Southwest and PPS will collaborate with local community partners in cities across the country to bring new life to their public spaces. Earlier this week, Southwest and PPS unveiled their most recent project in San Antonio, Texas, where they partnered with the Center City Development Office to activate historic Travis Park through new physical amenities, including games, umbrellas, tables and chairs and ongoing programming, such as fitness classes and live music. In 2013, Southwest and PPS worked with the Downtown Detroit Partnership to transform an underutilized lawn in downtown’s Campus Martius Park into a seasonal beach with a deck and seating that serves as a fun and relaxing community gathering place for workers, families and children. Additionally, they worked with the Downtown Providence Parks Conservancy to create the Imagination Center, a new place for family activities in Burnside Park, located in the heart of downtown Providence, R.I.

Heart of the Community is part of Southwest’s broader efforts to connect people and strengthen local communities through its core business, charitable giving, community outreach, and environmental initiatives. To read more, go to Nuts About Southwest.

Meanwhile the Wall Street Journal (WSJ) has published an article on Southwest that claims the airline is showing its age and becoming a higher cost airline.

Read the article: CLICK HERE

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 N492WN (msn 33866) arrives in Las Vegas.

Southwest Airlines: AG Slide Show

Southwest to launch two new routes from Los Angeles to both Boise and Omaha

Southwest Airlines (Dallas) on June 9 will introduce new daily service from Los Angeles to Omaha, Nebraska. This will be followed by Los Angeles-Boise, Idaho weekly service starting on June 14.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-3H4 N614SW (msn 28033) with Blended Winglets arrives at Los Angeles International Airport (LAX).

Southwest Airlines: AG Slide Show

Southwest announces seven new routes from Washington Reagan National Airport

Southwest Airlines (Dallas) today announced that it is more than doubling its flights at Ronald Reagan Washington National Airport (DCA) with seven new nonstop routes and additional connecting itineraries beginning this summer.

Beginning August 10, 2014, Southwest Airlines will add daily, nonstop flights between Washington National Airport and:

  • Chicago (Midway) with six roundtrips at introductory fares as low as $119 one-way
  • Nashville with three roundtrips at introductory fares as low as $129 one-way
  • New Orleans with two roundtrips at introductory fares as low as $129 one-way

Beginning September 30, 2014, Southwest will further add to its DCA service:

  • Tampa, with two roundtrips at introductory fares as low as $84 one-way
  • Three additional flights to Chicago (Midway) for a total of nine daily roundtrips. This expanded pattern of service to Midway will also enable Southwest to provide convenient one-stop and connecting flights throughout the day between DCA and more than 40 other cities across the United States.

Beginning November 2, 2014, Southwest Airlines will add additional daily nonstop service between Washington Reagan National Airport and:

  • Akron-Canton (new route)
  • Dallas (Love Field) (new route)
  • Houston (Hobby) (additional flights)
  • Indianapolis (new route)
  • St. Louis (additional flights)

Southwest Airlines also today announces new service between:

  • St. Louis and San Francisco, daily nonstop roundtrip begins September 30, 2014, at introductory fares as low as $119 one-way
  • Los Angeles and Omaha, daily nonstop roundtrip begins June 9, 2014, at introductory fares as low as $159 one-way
  • St. Louis and Los Angeles, third daily nonstop roundtrip begins June 8, 2014
  • Boise and Los Angeles, (Saturday only) nonstop roundtrip begins June 14, 2014

Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-8H4 N8622A (msn 36919) arrives at Washington’s Reagan National Airport (DCA).

Southwest Airlines: AG Slide Show

Southwest moves to protect its Dallas Love Field home with 12 proposed new routes if it gets two new gates

Southwest Airlines (Dallas) plans to add 20 flights to 12 new nonstop destinations if the airline is able to acquire two additional gates at Dallas Love Field.  Southwest would add nonstop service to:

  • Charlotte, North Carolina
  • Charleston, South Carolina
  • Detroit, Michigan
  • Indianapolis, Indiana
  • Memphis, Tennessee
  • Minneapolis/St. Paul, Minnesota
  • Newark, New Jersey
  • Philadelphia, Pennsylvania
  • Raleigh/Durham, North Carolina
  • Sacramento, California
  • San Francisco, California
  • Seattle/Tacoma, Washington

These 12 new nonstop destinations would be added to Southwest’s schedule if the airline is able to obtain the rights to two Love Field gates that American Airlines must relinquish under the terms of a settlement with the U.S. Department of Justice.  These destinations would be in addition to the 15 cities that Southwest previously announced it would serve from Love Field beginning later this year, and five new nonstop destinations currently planned for service in 2015 that Southwest has announced:

  • Boston, Massachusetts (Boston Logan)
  • Oakland, California
  • Panama City Beach, Florida
  • Portland, Oregon
  • San Jose, California

With the upcoming sunset of the Wright Amendment restrictions on long-haul flights from Love Field, demand for Southwest nonstop service from the airport far exceeds the Company’s current gate capacity.  Access to two additional gates would allow Southwest to provide North Texas residents and visitors with the benefits of new nonstop flights to 12 additional destinations that would not otherwise be possible – a BIG win for consumers, businesses and the Dallas-Ft. Worth area.

The Dallas-Fort Worth area is a single aviation market that is served by two airports, DFW International Airport and Dallas Love Field.  In total, these airports have 175 gates (155 at DFW and 20 at Love Field).  If Southwest were to acquire the two additional Love Field gates, its percentage of gates in the Dallas-Ft. Worth market would remain very small, around 10 percent.  Importantly, other carriers, such as Virgin America and Delta Air Lines, already have a presence at DFW International Airport and can easily expand at DFW’s ample gate facilities.  In contrast, Southwest’s growth in North Texas can occur only at Love Field under the terms of the five-party agreement that resulted in the end of the Wright Amendment.

Copyright Photo: Arnd Wolf/AirlinersGallery.com. Boeing 737-7H4 N714CB (msn 27848) is retained in the gold “Southwest Classic” classic livery. It is pictured arriving at Las Vegas.

Southwest Airlines: AG Slide Show

 

Southwest to serve Cancun and Los Cabos starting on August 10

Southwest Airlines (Dallas) has announced the next phase of its international service by offering Customers new Southwest Airlines flights to both the Pacific and Caribbean coasts of Mexico, as well as other new domestic and international flying, as the carrier extended flight schedules through October 31, 2014.

Beginning August 10, 2014, Southwest Airlines will operate daily, nonstop flights between:

  • Cancun, Mexico, and Atlanta, Baltimore/Washington, and (Saturdays only) Milwaukee
  • San Jose del Cabo/Los Cabos, Mexico, and Santa Ana/Orange County
  • Nassau, Bahamas, and (Saturdays only) Atlanta

As the planned conversion of wholly owned subsidiary AirTran Airways’ destinations continues, Southwest intends to serve five countries previously served by AirTran by the end of this year.  Southwest previously announced service to Aruba, Nassau, and Montego Bay, beginning on July 1, 2014, and throughout this booking window is adding domestic connectivity through international gateway cities to many of the more than 80 cities served by Southwest Airlines across the United States.

Southwest’s phased rollout of international nonstop with domestic connecting service also brings new options for Denver customers who have made Southwest Airlines the largest air carrier in Colorado.

Beginning in October 2014, Southwest Airlines will offer nonstop service between Denver and:

  • Cancun, with daily roundtrip flights beginning on October 7, 2014; and
  • San Jose del Cabo/Los Cabos, with Saturday-only service beginning on October 11, 2014

Some flights will be operated by AirTran Airways which is being slowly integrated into Southwest Airlines.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-7H4 N730SW (msn 27862) completes its final bank on the river approach into downtown Ronald Reagan Washington National Airport (DCA).

Southwest Airlines: AG Slide Show

Southwest Airlines’ pilot union opposes the application of Norwegian Air International

Southwest Airlines‘ (Dallas) pilots, represented by the Southwest Airlines Pilots’ Association (SWAPA), issued this statement today in opposition to the application to the DOT by Norwegian Air International of Ireland:

The Southwest Airlines Pilots’ Association (SWAPA) is joining numerous pilot groups across the United States along with Airlines for America to battle against Norwegian Air International’s application to the Department of Transportation that would provide them the ability to circumvent labor laws of their home country.

SWAPA’s opposition is contradicted by the Washington Airports Task Force who have chosen to support the Norwegian Air International (NAI) application.  SWAPA has written to the Task Force to rethink their position and not oppose the many D.C.-area Southwest Airlines pilots.

NAI is an attempt by a Norwegian-owned entity to capitalize on the EU’s loose labor and aviation oversight regulations. They have applied for – and received – an Operating Certificate from Ireland although not one of their aircraft will operate from there.  They have also contracted a Singapore-based company to staff their cockpits with Bangkok-based contract pilots (to evade EU labor and tax provisions).

“This ‘Flag of Convenience’ strategy is one that has decimated the U.S. Maritime industry,” said Captain Paul Jackson, Chair of SWAPA’s Governmental Affairs. “That industry was once robust and employed over 200,000 U.S. workers. Today the number of jobs has been reduced to around 2,500 due to the offshoring of work through foreign flag registrations of ships seeking the lax labor laws of those countries. Southwest pilots will not stand by and let this happen to the U.S. airline industry.”

“We are not opposing the entrance of an airline that competes fairly and doesn’t use the lax EU laws to drive out labor protections, bringing a questionable level of oversight to their operation,” continued Jackson. “We strongly believe that our product and the work of our industry can stand up to any competitor if they play by the rules in place and do not seek to lower costs at any price.”

Located in Dallas, Texas, the Southwest Airlines Pilots’ Association (SWAPA) is a non-profit employee organization representing the more than 6,800 pilots of Southwest Airlines. SWAPA works to provide a secure and rewarding career for Southwest pilots and their families through negotiating contracts, defending contractual rights and actively promoting professionalism and safety.

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-5H4 N527SW (msn 26569) completes its final approach for the runway at Las Vegas’ McCarran International Airport.

Southwest Airlines: AG Slide Show

SWAPA logo

 

Southwest to use PASSUR surface management for quicker taxi times at 35 U.S. airports

Southwest Airlines (Dallas) has signed a contract with PASSUR Aerospace to use the surface management module of the PASSUR Integrated Traffic Management system for operation at 35 U.S. airports for quicker taxi times.

PASSUR Aerospace issued this statement:

PASSUR Aerospace, Inc (OTC: PSSR), an aviation business intelligence, Big Data, software and solutions company, today announced that Southwest Airlines has contracted for the surface management module of PASSUR Integrated Traffic Management for 35 US airports across its network to streamline turn times, reduce fuel burn, and enhance on time performance.

The PASSUR Surface Management solution assists Southwest in achieving shorter taxi-in and taxi-out times, and a quicker transition from arrival to departure for an aircraft, resulting in lower costs and emissions from engine fuel burn, less time for passengers spent on the ground in the aircraft, and greater “aircraft utilization” (hours an airplane spends in the air flying passengers). The surface solution is part of an integrated, gate-to-gate traffic management platform that optimizes the entire lifecycle of a flight.

The PASSUR Surface Management solution:

  • Enables real time and replayed view into how the movement of aircraft is affecting performance, including gates and taxiways
  • Provides analytical tools to understand where the operation can be optimized
  • Includes high resolution graphical surface flight tracking on a single, integrated display to enable seamless tracking of the surface, terminal airspace, and en route environments, for gate-to-gate tracking and management of flights. It is part of an integrated traffic management platform with multiple modules that optimize each of the key segments of a flight, gate-to-gate.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Southwest Airlines’ Boeing 737-7H4 WL N240WN (msn 32503) taxies to the departure runway at Seattle-Tacoma International Airport (SEA).

Southwest Airlines: AG Slide Show

Southwest Airlines announces new routes from Dallas’ Love Field

Southwest Airlines (Dallas) today announced the airline will offer new nonstop service to domestic destinations from its Dallas Love Field base following the repeal of flight restrictions imposed in 1979 limiting the reach of Dallas’ most convenient airport.

Southwest will begin serving five new nonstop destinations on October 13, 2014 followed by ten additional new nonstop destinations on November 2, 2014. The addition of these 15 new nonstop destinations will bring Southwest to a total of 31 nonstop destinations from Love Field.

“The official repeal of Wright Amendment federal flight restrictions signifies a turning point for the Southwest brand not just in Dallas, but from coast-to-coast,” said Gary Kelly, Southwest Airlines Chairman, President, and CEO. “We are pleased to offer this new service to the Customers of our home airport, who have waited 34 long years, and we thank the many, many folks who made this opportunity a reality.  Goodbye, Wright Amendment. Hello, America!”

Beginning October 13, 2014, Southwest Airlines will launch nonstop service from Dallas Love Field to:

  • Baltimore/Washington (BWI)
  • Denver
  • Las Vegas
  • Orlando
  • Chicago Midway

 

Beginning November 2, 2014, Southwest Airlines will launch nonstop service from Dallas Love Field to:

  • Atlanta
  • Nashville
  • Washington, D.C. (Reagan National)
  • Ft. Lauderdale/Hollywood
  • Los Angeles (LAX)
  • New York (LaGuardia)
  • Phoenix
  • San Diego
  • Orange County/Santa Ana
  • Tampa

Dallas Mayor Mike Rawlings and former U.S. Senator Kay Bailey Hutchison today joined Kelly and Southwest Employees at a news conference to celebrate the momentous occasion.

The Wright Amendment, and its subsequent revisions, limit Southwest Airlines’ current nonstop all jet service from Dallas Love Field to nine states including Texas.  The repeal of the federal law rewrites the map by allowing Southwest to potentially serve an additional 41 states and the District of Columbia(Reagan National airport) from Love Field.

In May, the airline will announce the specific flight schedules and fares for the sale of the new service.

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 N715SW (msn 27849) dressed in the Shamu design of SeaWorld Adventure Parks, arrives in Las Vegas.

Southwest Airlines: AG Slide Show

Southwest Airlines to add 27 daily flights at Washington’s Reagan National Airport

Southwest Airlines (Dallas) has confirmed it has been notified of its winning bid in an auction for 54 slots–allowing 27 additional daily flights–that will bring more competition to Reagan National Airport, three miles from downtown Washington, D.C.  Details of the carrier’s bid to acquire divested slots remain confidential under terms of the deal and are subject to final approval of the Department of Justice (DOJ) and completion of customary written agreements.  The additional slots will translate to an increase in Southwest’s service at Reagan National from 17 daily departures to 44 daily departures.  The carrier plans to announce destinations, schedules, and fares for the additional flights later this quarter and anticipates it will begin flying in the third quarter of 2014.

The slots that Southwest will purchase at Reagan National became available as a result of a settlement of litigation last Autumn by the U.S. Department of Justice against the merger of American Airlines and US Airways.  In a separate development, Southwest recently announced new service between Reagan National and Kansas City International Airport beginning Feb. 1, 2014.

In addition to Southwest’s presence at Washington Reagan National Airport (DCA) and Washington Dulles International Airport (IAD), Southwest offers the greater Baltimore/Washington region more than 200 daily departures from Baltimore/Washington Thurgood Marshall International Airport (BWI) to nearly 60 cities and, beginning on July 1, 2014, will offer new daily service on Southwest between BWI and Aruba, The Bahamas, and Jamaica, launching a new international chapter for both the carrier and Maryland’s largest airport.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-7H4 N486WN (msn 33852) of Southwest Airlines with the “Free Bags Fly Here” sticker arrives at Washington’s Ronald Reagan National Airport on the River Approach.

Southwest Airlines: AG Slide Show

Southwest Airlines to retire the AirTran Airways name and brand by the end of this year

Southwest Airlines (Dallas) intends to retire the AirTran Airways name, brand and remaining international and domestic routes by the end of this year according to Southwest CEO Gary Kelly at his press conference announcing the first Southwest international routes.

Southwest acquired AirTran in 2011 and has been gradually transferring planes, people and routes to Southwest as it works on the integration.

It will be the end of the carrier and an era.

Copyright Photo: Brian McDonough/AirlinersGallery.com. With the lease transfer of the AirTran Boeing 717s to Delta Air Lines the special liveries are rapidly going away. AirTran was a big believer in the special schemes. Formerly with TWA, Boeing 717-231 N936AT (msn 55058) in the Indianapolis Colts NFL team colors arrives at Baltimore/Washington (BWI) in the past.

AirTran Airways: AG Slide Show

AirTran logo

Remaining AirTran routes from the Atlanta hub:

AirTran 1.2014 ATL Route Map

Video: A previous AirTran TV Commercial:

Video: A company video celebrating its 10th Anniversary back in 2010:

Southwest Airlines announces its first international routes to Aruba, Montego Bay and Nassau

Southwest Airlines (Atlanta) today announced its first-ever scheduled international flights.

Beginning July 1, 2014, Southwest Airlines will operate daily, nonstop flights between:

  • Atlanta and Aruba, and Montego Bay
  • Baltimore/Washington and Aruba, Nassau, and (twice daily) Montego Bay
  • Orlando and (Saturday only) Aruba, and Montego Bay

In this first phase of the Company’s international conversion plan, wholly owned subsidiary AirTran Airways will continue service between Atlanta and Nassau, between Chicago Midway and Montego Bay, as well as flights to/from Cancun, Los Cabos, andMexico City, Mexico, and Punta Cana, Dominican Republic. By the end of 2014, the carrier plans to complete the launch of Southwest Airlines service to the remaining four international destinations on the Company’s network route map of 96 destinations in six countries. Both carriers’ full flight schedules are now open for booking through August 8, 2014.

The make-ready process for international service has involved nearly all of Southwest’s 45,000 Employees to implement additional technologies, training, and compliance, to obtain operational and regulatory approvals, and to ready the People, planes, and policies unique to Southwest Airlines to serve Customers in new countries.

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 WL N280WN (msn 32533) in the Sea World “Penquin One” livery arrives at Las Vegas.

Southwest Airlines: AG Slide Show

SWAPA opposes pre-clearance at Abu Dhabi for Etihad Airways’ flights to the USA

SWAPA logo

Southwest Airlines‘ (Dallas) pilots, represented by the Southwest Airlines Pilots’ Association (SWAPA) have issued this statement opposing the Customs and Border Patrol’s new Pre-Clearance located at the Abu Dhabi International Airport:

Today (January 24) marks a sad day for the U.S. airline industry, as the Southwest Airlines Pilots’ Association (SWAPA) learned that the first flight from Abu Dhabi to the United States was operated utilizing the Customs and Border Patrol’s Pre-Clearance facility located at the Abu Dhabi airport.

Both the U.S. airlines and their associated labor groups opposed the investment of U.S. taxpayer money into a facility that will only benefit foreign carriers.  No U.S. airline presently operates a single flight at Abu Dhabi, and the lone benefactor from this is the state-owned Etihad Airlines.  The traffic rate at the Abu Dhabi airport for U.S.-bound passengers is less than 200 per day on average, making this a poor investment of U.S. taxpayers’ increasingly limited resources.

The facility was funded earlier this month through the $1 trillion-plus omnibus spending bill, a gigantic measure which received very little debate.  The Abu Dhabi facility provision received very little attention — let alone the scrutiny it deserves — particularly while there remains pending legislation in the U.S. House of Representatives that would block funding for this facility.  H.R. 3488 introduced by Rep. Patrick Meehan [R-PA7] has 142 bipartisan co-sponsors.  With this measure in motion and despite an increasing throng of voices in opposition, the Department of Homeland Security still opened operations with this first flight today.

“Southwest pilots stand together with industry and labor partners to express our dismay at the federal government’s regrettable actions in choosing to open this unnecessary pre-clearance facility at Abu Dhabi,” said Captain Mark Richardson, SWAPA President.  “We are more than willing to compete against any airline in the world, including state-sponsored Middle East entities.  However, Middle East entities that already enjoy generous state sponsorship should not receive additional government support from the U.S. taxpayer.   We oppose our own government tilting the playing field further against U.S. airlines.”

Southwest Airlines: AG Slide Show

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Southwest Airlines reports record 4Q net income of $236 million and $805 million for the full year

Southwest Airlines Company (Dallas) today reported its fourth quarter and full year 2013 results:

  • Record fourth quarter net income, excluding special items*, of $236 million, or $.33 per diluted share, compared to fourth quarter 2012 net income, excluding special items, of $65 million, or $.09 per diluted share.  This exceeded the First Call consensus estimate of $.29 per diluted share.
  • Record fourth quarter net income of $212 million, or $.30 per diluted share, which included $24 million(net) of unfavorable special items, compared to net income of $78 million, or $.11 per diluted share, in fourth quarter 2012, which included $13 million (net) of favorable special items.
  • Record full year net income, excluding special items, of $805 million, or $1.12 per diluted share, compared to full year 2012 net income, excluding special items, of $417 million, or $.56 per diluted share.
  • Record full year net income of $754 million, or $1.05 per diluted share, which included $51 million (net) of unfavorable special items, compared to net income of $421 million, or $.56 per diluted share, in full year 2012, which included $4 million (net) of favorable special items.
  • Return on invested capital* (before taxes and excluding special items) for full year 2013 of 13.1 percent, as compared to 7.2 percent for full year 2012.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “We are happy to report full year 2013 net income of $805 million, and fourth quarter 2013 net income of $236 million, both excluding special items.  We are extremely proud of these record results and the tremendous progress made on our strategic initiatives, which produced substantial returns and contributed significantly to our superb 2013 financial performance.  Our full year 2013 total operating revenues were a record $17.7 billion, and our cost performance was excellent.  We generated strong free cash flow* of $1.0 billion in 2013, allowing us to return $611 million to our Shareholders, through share repurchases and dividend payments, and reduce debt and capital lease obligations by $313 million.  Our pre-tax return on invested capital, excluding special items (ROIC), for full year 2013 was 13.1 percent, nearly double the prior year’s performance.  I want to thank the outstanding People of Southwest and AirTran.  They deserve all the credit for producing these strong results, which earned them a$228 million contribution to the Profitsharing Plan for the year 2013, up 88.4 percent, or $107 million, compared to the prior year.

“We ended 2013 strong, with an exceptional fourth quarter performance.  Total operating revenues  were a fourth quarter record $4.4 billion, increasing 6.1 percent compared to fourth quarter last year.  On a unit basis (per available seat mile), our fourth quarter 2013 revenues increased 3.8 percent year-over-year, which is remarkable considering the increase in stage length and seat density.  While traffic was impacted at the beginning of the quarter by the federal government shutdown, we saw a healthy rebound in traffic and revenue trends, resulting in a five percent year-over-year increase in passenger unit revenues for the combined November/December period.  Strong travel demand and favorable year-over-year unit revenues have continued in January, thus far.  And, bookings for the remainder of the first quarter are strong.  Based on these trends, we currently expect year-over-year growth in first quarter 2014 unit revenues.

“We also had an outstanding fourth quarter 2013 cost performance, with unit costs, excluding special items, down 2.8 percent year-over-year.  We benefited from stable fuel prices, our ongoing fleet modernization efforts, and rigorous cost control efforts across the Company.  We closed the year with fourth quarter 2013 economic fuel costs of $3.05 per gallon, a decline of approximately eight percent from fourth quarter 2012.  Based on current market prices and our existing fuel derivative contracts, as of January 17 th, we expect first quarter 2014 economic fuel costs to be in the $3.05 to $3.10 per gallon range, which would be a significant drop year-over-year.  Excluding fuel, profitsharing, and special items, our fourth quarter 2013 unit costs declined 0.4 percent year-over-year.  We expect a year-over-year increase in our first quarter 2014 unit costs, excluding fuel, profitsharing, and special items.

“We are on track with our AirTran integration, achieving approximately $400 million in annual net pre-tax synergies in 2013, as planned.  Since 2011, we have converted 17 of the 52 AirTran Boeing 737-700s to Southwest, and we have replaced the flying for 13 AirTran Boeing 717-200s transitioned to Delta in 2013, with Southwest 737 service.  Nine more 717s were removed from active service at year end 2013, and the remaining 66 717s are scheduled to be removed from the AirTran network by the end of this year, and transitioned to Delta through 2015.  The remaining 35 AirTran Boeing 737-700s are scheduled to be converted to Southwest this year.  During fourth quarter, we converted Memphis, Pensacola, San Juan, and Buffalo to Southwest, and launched Southwest service to Richmond.  At year end 2013, all remaining domestic AirTran markets had Southwest service.  We are pleased with the rapid improvement of our developing markets as we convert AirTran routes into Southwest and optimize our combined networks.  With our international reservation system scheduled for implementation later this month, we remain on track to convert AirTran’s seven international markets, along with its remaining domestic markets, by the end of this year.  As planned, this will allow us to complete the AirTran integration and retire the brand by the end of 2014.

“We plan to launch international service on Southwest Airlines this year, which will be a huge milestone for us.  Construction of a five-gate international facility at Houston’s William P. Hobby Airport, expected to open in late 2015, has begun, and can accommodate Southwest service to destinations in the Caribbean, Mexico, Central America, and the northern cities of South America.  We also have future plans to bring Southwest near-international service to Fort Lauderdale-Hollywood International Airport (FLL).  Under a recently executed agreement with Broward County, Florida, which owns and operates FLL, we will oversee and manage the design and construction of the airport’s Terminal 1 Modernization Project.  In addition to significant improvements to the existing Terminal 1, the project includes the design and construction of a new five-gate Concourse A with an international processing facility.

“During 2014, we expect to take delivery of 33 new Boeing 737-800s and 12 pre-owned -700s, which will allow us to keep our 2014 capacity relatively flat, year-over-year, as we continue to transition the AirTran 717 fleet to Delta, and retire Classic Boeing 737 aircraft.  We continue to optimize the combined Southwest and AirTran route networks, and announced new travel options in 2014 to some of our Customers’ favorite domestic destinations, like San Diego and Portland, Oregon.  We also look forward to expanding service to Dallas Love Field, with the October 2014 repeal of the Wright Amendment.

“We are excited about bringing more flights to New York’s LaGuardia Airport with our recent acquisition of 12 takeoff and landing slots, pursuant to American Airlines’ required divestiture for its merger with US Airways.  In addition, we gained permanent control of 10 takeoff and landing slots at LaGuardia that Southwest currently operates under lease from American.  In an effort to bring more low fares to Washington’s Reagan National Airport, we also have bid on slots that American is required to divest.

“We enter 2014 financially strong and excited about the opportunities unfolding.  We are proud of our many 2013 accomplishments, most notably our strong financial performance that we believe positions us well to achieve our targeted 15 percent ROIC in 2014.  As ever, we remain focused on providing job security for our Employees;  providing friendly, reliable and low-fare service to our Customers;  and enhancing Shareholder value.”

Notable 2013 accomplishments for Southwest Airlines include:

  • Achieved 41st consecutive year of profitability, with record profits
  • Achieved 13.1 percent return on invested capital (before taxes and excluding special items)
  • Contributed $228 million to the Profitsharing Plan, an increase of $107 million
  • Returned $611 million to Shareholders through repurchases of $540 million of common stock (38 million shares) and distribution of $71 million in dividends
  • Reduced long-term debt and capital lease obligations by $313 million
  • Deferred $1 billion in aircraft capital spending to beyond 2018
  • Received numerous awards and recognitions, most notably being recognized as the Best Domestic Airline for Customer Service by Executive Travel Magazine’s Leading Edge Awards, named Brand of the Year in the Value Airline Category by the Harris Poll, and recognized with the top ranking by InsideFlyer Magazine for Best Customer Service and Best Loyalty Credit Card
  • For the 17th consecutive year, Southwest Airlines Cargo received the 2013 Quest for Quality Award, awarded by Logistics Management Magazine
  • Launched the first Southwest destination outside the 48 contiguous states with service to San Juan, Puerto Rico
  • Completed the connection between the Southwest and AirTran networks
  • Expanded Southwest Cargo to the AirTran network
  • Ended the year with Southwest service in all domestic AirTran airports
  • Launched AirTran service to Hartford and Oklahoma City
  • Completed the 143-seat Evolve retrofit of 372 Southwest 737-700s and 78 737-300s
  • Converted 6 of the 52 AirTran 737-700s to the Southwest livery with Evolve configuration, bringing cumulative conversions to 17
  • Transitioned 13 of the 88 AirTran 717-200s to Delta Air Lines
  • Reached a cumulative 65 percent of the AirTran workforce converted to Southwest, with the remaining flight crews and dispatchers scheduled to transition in 2014
  • Completed equipping all -700 and -800 aircraft with satellite-based WiFi  (including completed AirTran conversions) and became the first and only carrier to offer gate-to-gate connectivity
  • Partnered with DISH to offer “TV Flies Free” in second half 2013; DISH sponsorship was recently extended through 2014
  • Launched movies on demand, a new WiFi portal, and Messaging feature for iOS users
  • Remained on track to implement Southwest’s International Reservation system in January 2014
  • Broke ground on the five-gate, international facility at Houston’s William P. Hobby Airport, planned to open in late 2015
  • Acquired 12 slots (for six roundtrip flights) at New York’s LaGuardia Airport and permanently secured 10 slots (five roundtrip flights) that are currently being operated by Southwest
  • Joined the Transportation Security Administration’s (TSA) expedited screening program known as TSA Pre Check™

Financial Results
The Company’s fourth quarter 2013 total operating revenues increased 6.1 percent to $4.4 billion, while operating unit revenues increased 3.8 percent, on a 2.2 percent increase in available seat miles and a 3.0 percent increase in average seats per trip, all as compared to fourth quarter 2012.  Based on current revenue and booking trends, the Company expects year-over-year growth in its first quarter 2014 unit revenues.

Total operating expenses in fourth quarter 2013 decreased 1.0 percent to $4.0 billion, as compared to fourth quarter 2012.  The Company incurred costs (before taxes) associated with the acquisition and integration of AirTran, which are special items, of $19 million during fourth quarter 2013, compared to $14 million in fourth quarter 2012.  Excluding special items in both periods, total operating expenses of $4.0 billion in fourth quarter 2013 were comparable to fourth quarter 2012.

Fourth quarter 2013 economic fuel costs were $3.05 per gallon, including $.03 per gallon in favorable cash settlements from fuel derivative contracts, compared to $3.32 per gallon in fourth quarter 2012, including $.09per gallon in unfavorable cash settlements from fuel derivative contracts.  Based on the Company’s fuel derivative contracts and market prices as of January 17 th, first quarter 2014 economic fuel costs are expected to be in the $3.05 to $3.10 per gallon range, which is significantly below first quarter 2013’s economic fuel costs of $3.29 per gallon.  As of January 17 th, the fair market value of the Company’s hedge portfolio through 2017 was a net asset of approximately $108 million.  Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding economic fuel expense, profitsharing, and special items in both periods, fourth quarter 2013 operating costs increased 1.8 percent from fourth quarter 2012, and decreased 0.4 percent on a unit basis.  Based on current cost trends, the Company expects first quarter 2014 unit costs, excluding fuel, profitsharing, and special items, to increase from first quarter 2013’s 8.21 cents, with full year 2014 unit costs, excluding fuel, profitsharing, and special items, expected to increase year-over-year in the two to three percent range.

Fourth quarter 2013 operating income was a fourth quarter record $386 million, compared to $91 million in fourth quarter 2012.  Excluding special items, fourth quarter 2013 operating income was also a fourth quarter record $418 million, compared to $136 million in the same period last year.

Other expenses in fourth quarter 2013 were $52 million, compared to other income of $34 million in fourth quarter 2012.  This $86 million swing primarily resulted from $27 million in other losses recognized in fourth quarter 2013, compared to other gains of $62 million recognized in fourth quarter 2012.  In both periods, these gains/losses included unrealized mark-to-market gains/losses associated with a portion of the Company’s fuel hedging portfolio, which are special items.  Excluding these special items, fourth quarter 2013 had $21 million in other expenses, compared to $3 million in fourth quarter 2012, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts.  First quarter 2014 premium costs related to fuel derivative contracts are currently estimated to be in the $10 million to $20 million range, compared to $5 millionin first quarter 2013.  Net interest expense in fourth quarter 2013 was $25 million, compared to $28 million in fourth quarter 2012.

For 2013, total operating revenues increased 3.6 percent to $17.7 billion, while total operating expenses of$16.4 billion were comparable to 2012.  Operating income for 2013 was a record $1.3 billion, compared to $623 million for 2012.  For 2013, special charges (before taxes) associated with the acquisition and integration of AirTran were $86 million.  Cumulative costs associated with the acquisition and integration of AirTran, as of December 31, 2013, totaled approximately $410 million (before profitsharing and taxes).  The Company expects total acquisition and integration costs to be no more than $550 million (before profitsharing and taxes).  Excluding special items in both periods, operating income was a record $1.4 billion for 2013, compared to $838 million for 2012.

As of January 22, the Company had approximately $3.1 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion.  Net cash provided by operations during fourth quarter 2013 was $302 million, and capital expenditures were $451 million.  For  2013, net cash provided by operations was $2.49 billion, and capital expenditures were $1.45 billion, resulting in free cash flow of approximately $1.04 billion.  The Company currently estimates its 2014 capital expenditures to be in the $1.5 billion to $1.6 billion range.  The Company repurchased $540 million in common stock, or 38 million shares, during 2013.  Since August 2011, the Company has repurchased $1.2 billion, or 111 million shares, of common stock under its $1.5 billion share repurchase authorization.  This reduced the Company’s outstanding common stock by approximately 14 percent.  The Company repaid $313 million in debt and capital lease obligations during 2013, and is currently scheduled to repay approximately $550 million in debt and capital lease obligations during 2014.

Copyright Photo: Jay Selman/AirlinersGallery.com. Southwest Airlines’ Boeing 737-7H4 WL N945WN (msn 36660) in the Florida One scheme approaches the runway at Las Vegas’ McCarran International Airport.

Southwest Airlines: AG Slide Show

Wrong airport Southwest Airlines pilots “mistook bright runway lights” for their intended Branson airport

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Southwest Airlines (Dallas) pilots who landed at the wrong Branson, Missouri airport on January 12 told NTSB investigators “they mistook the bright runway lights of the smaller M. Graham Clark Downtown Airport for their intended destination at Branson Airport”, according to a National Transportation Safety Board (NTSB) statement and this report by Reuters.

The pilots stated they did not realize they were at the wrong airport until they had landed, which required heavy braking.

Read the full report from Reuters: CLICK HERE

Read the follow-up report from CNN: CLICK HERE

Southwest Airlines: AG Slide Show

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