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 (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.
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 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.
Branson Airport (Branson, Missouri) has released this statement:
Branson Airport (BKG) is pleased to announce the arrival of Buzz Airways service to both Chicago (Midway) and Houston (Hobby) beginning June 12, 2014. Fares begin at $99.00 each way including taxes. Flights will operate in each market six days per week.
The new flights by Buzz will replace the service currently offered on Southwest Airlines (Dallas) that is slated to end June 8. The flight schedule has been designed to allow customers to book separate tickets on Southwest in order to connect to and from other popular gateways.
Corporate Flight Management, Inc. d/b/a Buzz Airways (CFM) is a diverse aviation services company that includes Part 135 and 91 charter and management services, three Fixed Base Operations, a FAR Part 145 certified repair facility, an aircraft sales division, and FAR 141 pilot and maintenance training.
Buzz Airways will reportedly operate Jetstream 41 aircraft on the two routes.
Copyright Photo: Corporate Flight Management.
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 (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 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 (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‘ (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.
Virgin America (San Francisco) has secured the last eight landing and takeoff slots at Washington’s Reagan National Airport (DCA). Virgin America outbid Spirit Airlines and others for the last slots according to Reuters. This last allotment comes after last month’s award of 54 slots to Southwest Airlines and 40 to JetBlue Airways (including 16 it had been leasing). The slot sales were demanded by the Department of Justice (DOJ) a precondition for the American Airlines-US Airways merger.
Copyright Photo: Brian McDonough/AirlinersGallery.com. Airbus A320-214 N839VA (msn 4610) completes its final approach from the south into Washington Reagan National Airport.
Current Route Map: There will now be more Virgin America routes and flights radiating from DCA probably starting with LAX and more flights to SFO. Here are the current routes from Los Angeles (LAX):
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 (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)
- Las Vegas
- Chicago Midway
Beginning November 2, 2014, Southwest Airlines will launch nonstop service from Dallas Love Field to:
- Washington, D.C. (Reagan National)
- Ft. Lauderdale/Hollywood
- Los Angeles (LAX)
- New York (LaGuardia)
- San Diego
- Orange County/Santa Ana
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 (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 (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.
Remaining AirTran routes from the Atlanta hub:
Video: A previous AirTran TV Commercial:
Video: A company video celebrating its 10th Anniversary back in 2010:
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‘ (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 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™
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.
Wrong airport Southwest Airlines pilots “mistook bright runway lights” for their intended Branson airport
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.
Read the full report from Reuters: CLICK HERE
Read the follow-up report from CNN: CLICK HERE
Southwest Airlines (Dallas) recently inherited Branson, Missouri from its subsidiary AirTran Airways and some of its pilots may not be as familiar with Branson Airport (IATA: BKG, ICAO: KBBG, FAA LID: BBG) as other long-time Southwest-served airports. The airport opened on May 11, 2009 and is privately owned by Branson Airport, LLC.
Apparently the crew of flight WN 4013 last night (January 12) from Chicago (Midway) to Branson were a bit unfamiliar with the area. The Boeing 737-700 with 124 passengers and five crew members mistakenly landed at M. Graham Clark Downtown Airport (IATA: PLK, ICAO: KPLK, FAA LID: PLK) in Branson. The downtown airport has one runway designated 12/30 with an asphalt surface measuring 3,738 by 100 feet (1,139 x 30 m) according to Wikipedia. PLK is owned and operated by Taney County.
The aircraft involved is Boeing 737-7H4 N272WN (msn 32527). The aircraft will be ferried out of PLK with only a crew.
Read the full report (with video) from OzarksFirst.com: CLICK HERE
Aviation Partners Boeing (APB) today announced that Southwest Airlines (Dallas) has ordered Split Scimitar Winglets for its Boeing Next-Generation 737-800 aircraft. APB’s newest program is the culmination of a five-year design effort using the latest computational fluid dynamic technology to redefine the aerodynamics of the Blended Winglet into an all-new Split Scimitar Winglet. The unique feature of the Split Scimitar Winglet is that it uses the existing Blended Winglet structure, but adds new strengthened spars, aerodynamic scimitar tips, and a large ventral strake. APB looks forward to receiving FAA certification for Split Scimitar Winglets later this month.
By upgrading its Boeing Next-Generation 737-800s with Split Scimitar Winglets, APB estimates that Southwest will increase its annual fuel savings of approximately three percent per aircraft from Blended Winglets to approximately five percent per aircraft annually with the Split Scimitar Winglet upgrade. In addition to lowering Southwest’s fuel costs, the Split Scimitar Winglet will reduce emissions, supporting Southwest’s commitment to efficiency and to the Planet.
Southwest’s order of 85 Split Scimitar Winglets allows the airline to retrofit the 52 Boeing 737-800s currently in its fleet, in addition to the 33 Boeing 737-800s the airline expects to be delivered in 2014. Pending FAA certification, Southwest Airlines plans to begin Split Scimitar Winglet retrofits at Aviation Technical Services, based in Everett, Washington, in the first half of 2014, with an expected completion of all retrofits by early 2015.
APB’s Split Scimitar Winglet program is the most successful product launch in its history. Since launching the program early last year, APB has now taken orders and options for 1,451 Split Scimitar Winglet systems. Over the last 10 years, APB has sold more than 7,000 Blended Winglet Systems. Over 5,100 Blended Winglet Systems are now in service with over 200 airlines in more than 100 countries. APB estimates that Blended Winglets have saved airlines worldwide over 4 billion gallons of jet fuel to-date.
Aviation Partners Boeing is a Seattle based joint venture of Aviation Partners, Inc. and The Boeing Company.
Southwest in its advertisements is helping the public correlate the wing “doohickeys” with reduced costs which lead to lower fares. Now they will have “super doohickeys”:
Copyright Photo: Bruce Drum/AirlinersGallery.com. The current Boeing 737-800 fleet has the Aviation Partners Boeing Blended Winglets. They will be replaced with the new model. Boeing 737-8H4 N8309C (msn 36985) taxies to the gate at Seattle-Tacoma International Airport.
Southwest Airlines (Dallas) has announced its schedule through June 2014. In the wake of the recent slot reallocation concerning New York’s LaGuardia Airport, Southwest is increasing service between LaGuardia and Nashville, Houston Hobby, Chicago Midway and Akron-Canton, Ohio. The new service begins on May 11, 2014.
Southwest Airlines also announced new nonstop service between San Diego and Orlando; New Orleans; Portland, Oregon; and Seattle/Tacoma. The new flights come as Southwest gets ready to celebrate its 32nd anniversary of serving San Diego’s Lindbergh Field.
The airline also is making waves in Portland, Oregon, by offering new nonstop destinations to Customers in the northwest. That includes the two daily nonstop flights to San Diego, as well as daily service to Baltimore/Washington, Chicago Midway, and Houston Hobby.
As Southwest moves toward its final phase of integrating AirTran Airways, new nonstop service at Hartsfield-Jackson Atlanta International Airport includes service to Detroit, Minneapolis/St. Paul, Milwaukee, and Pittsburgh.
Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 737-8H4 WL N8319F (msn 36994) lands at Las Vegas.
Southwest completes the installation of Water Vapor Sensing Systems on 87 Boeing 737 aircraft, will fly international routes next year
Southwest Airlines (Dallas) has completed the installation of Water Vapor Sensing Systems (WVSS-II) on 87 Boeing 737 aircraft. The water vapor initiative, a result of a partnership between Aeronautical Radio Incorporated (ARINC), National Oceanic and Atmospheric Administration (NOAA) and SpectraSensors, has the potential to improve weather forecasting by providing real-time and frequent humidity data when aircraft takeoff and land at airports around the country.
“Southwest’s meteorology team has always worked closely with ARINC and NOAA, and the WVSS-II project is symbolic of our strong reliance on each other. We are proud to be the only passenger airline currently participating in the project and look forward to the many ways WVSS-II will impact and improve both weather forecasting and the impact on airline operations,” said Rick Curtis, Chief Meteorologist, Southwest Airlines.
National Weather Service (NWS) forecasters routinely use WVSS-II observations in their day-to-day operations. Monitoring the distribution of moisture in the atmosphere and how the moisture levels change with time play an integral role in forecast preparation. Aviation forecasters rely on WVSS-II data to help determine location and timing of fog, cloud formation, and dissipation, and altitudes of cloud ceilings, all critical to determining safe conditions for aircraft travel.
“Water vapor is the most rapid-changing and under-sampled element in the atmosphere,” said Carl Weiss, an aviation meteorologist for NOAA. “On the heels of a tumultuous weather year, WVSS-II is part of a larger initiative contributing to Weather Ready Nation, our initiative focused on building community resilience in the face of extreme weather events. WVSS-II data upon takeoffs and landings allow forecasters to monitor and stay on top of how moisture is changing in the atmosphere, specifically in severe weather situations when preparedness is especially important.”
WVSS-II, manufactured by SpectraSensors, Inc., measures water vapor in the atmosphere hundreds of times during an aircraft’s flight. These measurements are automatically transmitted to ARINC’s headquarters in Annapolis, MD, via the ARINC GLOBALink/VHFTM data link service. The moisture data along with other aircraft weather data are then forwarded in near real-time to the U.S. National Weather Service, which uses them to improve the accuracy of its computer-generated weather forecasts and severe weather warnings.
“The WVSS-II observations add a critical new piece of weather data to the forecasting puzzle,” says Jeannine Hendricks, ARINC’s Manager for the WVSS program. “For the first time in aircraft operations, we are collecting water vapor data that measures the humidity in the air. This has the potential to revolutionize weather forecasting—especially when predicting thunderstorms—a significant weather occurrence for aviation.”
While weather balloons, previously the only method for capturing weather data, measure wind, temperature, and humidity data just twice per day at certain locations, the water vapor sensors gather humidity data throughout the day at multiple points across the nation. The improved water vapor data will have a direct benefit in the accuracy of forecasts of precipitation and clouds, which will benefit the aviation community, its customers, and the general public.
Southwest Airlines plans to continue working with ARINC and NOAA in conjunction with the National Weather Service to expand WVSS-II installations on its aircraft fleet.
In other news, Southwest will announce a schedule for international service next year according to CEO Gary Kelly and Reuters. This will be the first international routes for the carrier. Subsidiary AirTran Airways currently flies to Mexico and the Caribbean.
Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 737-8H4 WL N8310C (msn 38807) arrives in Las Vegas.
Southwest Airlines (Dallas) will bid aggressively for landing and takeoff slots at Washington’s Reagan National Airport (DCA) that are being divested by American Airlines-US Airways according to this report by Reuters. American Airlines-US Airways are giving up 52 slot pairs at DCA. Southwest currently has 32 slots at DCA.
Read the full report: CLICK HERE
Copyright Photo: Brian McDonough/AirlinersGallery.com. Southwest’s Boeing 737-7H4 WL N443WN (msn 29838) with the special “The Spirit of Hope” markings banks on the river approach into DCA.
Southwest Airlines (Dallas) has acquired 12 takeoff and landing slots (for six roundtrip flights) at New York’s LaGuardia Airport (LGA) being divested by American Airlines (Dallas/Fort Worth) as part of its merger with US Airways (Phoenix). In addition, Southwest gained permanent control of 10 takeoff and landing slots (for five roundtrip flights) that it currently operates under a lease from American. Details of the transactions are confidential. Southwest plans to begin its new service at LGA in May 2014. Details of the new service will be available later this month.
Southwest and its subsidiary AirTran Airways currently operate 27 daily roundtrip flights to and from LGA to eight nonstop destinations. The acquired slots will allow the airlines to add six daily roundtrips.
Southwest currently serves Newark Liberty International, LaGuardia Airport, and Long Island MacArthur Airport. These six additional roundtrips at LGA will strengthen Southwest’s service to and from the New York City area.
In other news, Southwest Airlines announced its decision to close three cities in the airline’s network. On June 7, 2014, Southwest will cease operations at Branson Airport (BKG), Key West International Airport (EYW), and Jackson-Evers International Airport (JAN). Southwest began service to Jackson-Evers International in 1997. The airline added Branson Airport and Key West International Airport to its route map in 2012 as part of its integration with AirTran, a wholly-owned subsidiary.
“Unfortunately, the level of local demand no longer allows Southwest to profitably serve these markets,” said Bob Jordan, Southwest’s Executive Vice President and Chief Commercial Officer. “Southwest takes pride in becoming not only a great choice for air travel in the cities we serve, but we also become a member of the community. These decisions are never easy.”
Over the next six months, Southwest will operate its full schedule at each of these cities, and there will be no disruption to reservations for travel through June 6, 2014.
Copyright Photo: Bruce Drum/AirlinersGallery.com. Southwest Airlines retains one Boeing 737-700 in a gold “Southwest Classic” version of the original 1971 color scheme. Boeing 737-7H4 N714CB (msn 27848) taxies at Seattle-Tacoma International Airport.
Southwest Airlines (Dallas) and Virgin America (San Francisco) are interested in buying the slots at New York (LaGuardia) that American Airlines (Dallas/Fort Worth) and US Airways (Phoenix) have agreed to give up with the DOJ for the merger approval according to Reuters.
Read the full report: CLICK HERE
Copyright Photo: Ken Petersen/AirlinersGallery.com. Southwest Airlines’ Boeing 737-7H4 WL N216WR (msn 32488) with “Free Bags Fly Here” extra markings departs from Raleigh-Durham International Airport (RDU).
Southwest Airlines (Dallas) is taking a different approach in its latest ads concerning customer service. While other airlines continue to add extra charges for what was once considered “normal service”, Southwest is extolling its simplified “no charge” approach and new added services. While the Southwest does charge for some extra services such as priority boarding, it does not charge for many of the extras which are now becoming the norm with other airlines. This new “Check” advertisement campaign (above) extolls this different while maintaining the “low fare” impression.
Have you seen an interesting airline advertisement or a new advertising approach? Send us the link and we will spotlight the ad.
Southwest Airlines (Dallas) launched new flights this weekend in three cities that join the carrier’s network through previously established service by wholly owned subsidiary AirTran Airways (Dallas). The new routes complete a plan to bring Southwest Airlines service to all domestic cities in the Company’s network by year’s end, as the integration of Southwest and AirTran approaches its final phases.
As of November 3, 2013, Southwest Airlines offers new nonstop service between:
Pensacola and Nashville and Houston (Hobby)
Richmond and Orlando
Memphis and Baltimore/Washington, Houston (Hobby), Orlando, Chicago (Midway), and Tampa.
AirTran will continue service between Atlanta and Richmond International Airport, with four daily nonstop departures. Southwest Airlines anticipates a full conversion in Richmond in the second half of 2014.
Copyright Photo: Ton Jochems/AirlinersGallery.com. Southwest Airlines’ Boeing 737-3H4 WL N352SW (msn 24888) in the Lone Star One motif lands in Las Vegas.
Southwest Airlines (Dallas) is now promoting the Aviation Partners Boeing Blended Winglets, called “DooHickeys”, in its latest Fall 2013 TV advertisement campaign. The reference to the winglet leading to savings and to lower prices is stressed and also impressed on the viewer. It is the first time we can remember that an airline has brought the winglet enhancement to the attention of the passenger and tied in the enhancement with lower fares including their $59 fares.
Videos: Southwest Airlines. Top, the actual TV ad and below a behind the scenes look at the ad campaign:
Southwest Airlines Company (Dallas) reported its third quarter 2013 results:
- Record third quarter net income, excluding special items*, of $241 million, or $.34 per diluted share, compared to third quarter 2012 net income, excluding special items, of $97 million, or $.13 per diluted share. This was in line with the First Call consensus estimate of $.34 per diluted share.
- Record third quarter net income of $259 million, or $.37 per diluted share, which included $18 million (net) of favorable special items, compared to net income of $16 million, or $.02 per diluted share, in third quarter 2012, which included $81 million (net) of unfavorable special items.
- Return on invested capital* (before taxes and excluding special items) for the 12 months ended September 30, 2013, of 11 percent, as compared to 7 percent for the 12 months ended September 30, 2012.
- Cash and short-term investments at September 30, 2013, of $3.3 billion.
- Cash flow from operations of $428 million, and capital expenditures of $268 million, resulting in $160 million in free cash flow* in third quarter 2013.
- The Company returned approximately $178 million to Shareholders during third quarter 2013 through the payment of $28 million in dividends and the repurchase of approximately $150 million in common stock under an accelerated share repurchase program executed in September 2013. Since August 2011, the Company has repurchased approximately $1.1 billion, or approximately 111 million shares, under its $1.5 billion share repurchase authorization.
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “We are very pleased to report a record third quarter earnings performance. Our People delivered very strong year-over-year earnings growth as we continued to transform our Company for the future. Our continued focus on strategic initiatives is paying off, and I am very proud of our outstanding Employees for a very solid third quarter financial performance.
“Third quarter revenues were also a third quarter record, with total operating revenues per available seat mile (unit revenues) increasing 4.5 percent year-over-year. Especially considering our increase in stage length and seat density, this is a very strong performance. Further, we continue to have a high number of markets under development as we convert AirTran routes into Southwest routes and optimize our combined networks. Finally, about 15 percent of our system is still operating under the AirTran brand. As the network stabilizes in the future, AirTran becomes fully converted, and fewer schedule changes are made, this should provide a further boost to unit revenues. While unit revenue trends were impacted by the recent government shutdown, current bookings for the combined November/December holiday period are strong.
“We are on track with our plan to fully integrate AirTran into Southwest Airlines by the end of next year, and we expect to achieve approximately $400 million in annual net pre-tax synergies in 2013. Our efforts to optimize our connected networks continued during third quarter, with the conversion of AirTran’s service at Grand Rapids Gerald R. Ford International Airport to Southwest. Southwest’s entrance to western Michigan doubled the service previously offered by AirTran, with a total of six daily nonstop departures to Baltimore/Washington, Orlando, St. Louis, and Denver. We will take another significant step towards full integration with our November 2013 schedule, as we reschedule AirTran’s Atlanta flights into a point-to-point operation.
“Our plan to add international capabilities for Southwest in 2014 is on track. We reached an exciting milestone last month with the ground breaking on Southwest’s first international terminal in our 43-year history. The five-gate facility at Houston’s William P. Hobby Airport, planned to open in 2015, will accommodate Southwest service to potential destinations in the Caribbean, Mexico, Central America, and northern South America.
“Our fleet modernization efforts are continuing as planned. During third quarter 2013, we placed one new Boeing 737-800 and two previously owned Boeing 737-700s into active service, and retired four Boeing 737-500 aircraft. In addition, we transitioned the first of AirTran’s 88 Boeing 717-200s out of the fleet, and removed 11 more from active service in preparation for transition. At the end of the third quarter, all Southwest Boeing 737-700s, 78 Boeing 737-300s, and 14 AirTran Boeing 737-700s converted to the Southwest livery had been retrofitted with the Evolve interior. Following a two percent year-over-year increase expected this year, our available seat miles are not expected to increase year-over-year in 2014. As we continue to execute our strategic initiatives, our priorities remain: optimize the network; run an excellent airline operation; provide outstanding and friendly Customer Service; and achieve and sustain our targeted financial returns.
“Our third quarter economic fuel costs declined 5.7 percent year-over-year driven by lower prices per gallon and less fuel consumed per available seat mile. We currently expect another significant year-over-year decrease in our fourth quarter 2013 economic fuel costs. Based on relatively stable current market prices and our existing fuel derivative contracts, as of October 21st, we expect our fourth quarter economic fuel price per gallon to be comparable to our third quarter 2013 economic fuel price per gallon.
“Excluding fuel, special items, and profitsharing, our unit costs increased slightly compared to third quarter last year, as expected. Based on current trends and ongoing benefits anticipated from our fleet modernization efforts, we expect our fourth quarter 2013 unit costs, excluding fuel, special items, and profitsharing, to be roughly flat versus a year ago.
“It is imperative that we preserve our financial health and return value to our stakeholders. Our balance sheet, liquidity, and cash flows are strong, and we are aggressively managing our debt and total invested capital. Our People are exceptional and they are working exceptionally hard. I am proud of them and these strong third quarter results.”
Awards and Recognitions
- Ranked first Value Airline Brand of the Year in the 2013 Harris Poll EquiTrend Rankings
- Named one of the Best Economy Class Flight Experience in 10 Best Readers’ Choice travel award contest sponsored by USA TODAY
- Ranked fifth on the International Council on Clean Transportation list of the most fuel efficient domestic passenger airlines
The Company’s third quarter 2013 total operating revenues increased 5.5 percent to $4.5 billion, while operating unit revenues increased 4.5 percent, on a 1.0 percent increase in available seat miles and an approximately 4.0 percent increase in average seats per trip, all as compared to third quarter 2012. Total operating expenses in third quarter 2013 decreased 2.4 percent to $4.2 billion, as compared to third quarter 2012. The Company incurred costs (before taxes) associated with the acquisition and integration of AirTran, which are special items, of $28 million during third quarter 2013, compared to $145 million in third quarter 2012. Cumulative costs associated with the acquisition and integration of AirTran, as of September 30, 2013, totaled $391 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 of $4.1 billion in third quarter 2013 were comparable to third quarter 2012.
Third quarter 2013 economic fuel costs were $3.06 per gallon, including $.01 per gallon in favorable cash settlements from fuel derivative contracts, compared to $3.16 per gallon in third quarter 2012, including $.03 per gallon in unfavorable cash settlements from fuel derivative contracts. Based on the Company’s fuel derivative contracts and market prices as of October 21st, fourth quarter 2013 economic fuel costs are expected to be in the $3.05 to $3.10 per gallon range, which is significantly below fourth quarter 2012′s economic fuel costs of $3.32 per gallon. As of October 21st, the fair market value of the Company’s hedge portfolio through 2017 was a net asset of approximately $135 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.
Excluding economic fuel expense, special items, and profitsharing in both periods, third quarter 2013 operating costs increased 2.0 percent from third quarter 2012, and increased 1.0 percent on a unit basis.
Operating income for third quarter 2013 was $390 million, compared to $51 million in third quarter 2012. Excluding special items, operating income was $439 million in third quarter 2013, compared to $208 million in the same period last year.
Other income in third quarter 2013 was $29 million, compared to other expenses of $18 million in third quarter 2012. This $47 million swing primarily resulted from $59 million in other gains recognized in third quarter 2013, compared to other gains of $10 million recognized in third quarter 2012. In both periods, these gains primarily resulted from 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, third quarter 2013 had $19 million in other expense, compared to $18 million in third quarter 2012, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Fourth quarter 2013 premium costs related to fuel derivative contracts are currently estimated to be approximately $22 million, compared to $3 million in fourth quarter 2012. Net interest expense in third quarter 2013 of $30 million was comparable to third quarter 2012.
For the nine months ended September 30, 2013, total operating revenues increased 2.8 percent to $13.3 billion, while total operating expenses of $12.4 billion were comparable to the same period last year. Operating income for the nine months ended September 30, 2013, was $893 million, compared to $532 million for the same period last year. Excluding special items in both periods, operating income was $1.0 billion for the nine months ended September 30, 2013, compared to $702 million for the same period last year.
Net income for the nine months ended September 30, 2013, was $542 million, or $.75 per diluted share, compared to $343 million, or $.45 per diluted share, for the same period last year. Excluding special items, net income for the nine months ended September 30, 2013, was $569 million, or $.79 per diluted share, compared to $352 million, or $.46 per diluted share, for the same period last year.
As of October 23rd, the Company had approximately $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 2013 was $428 million, and capital expenditures were $268 million. During third quarter 2013, the Company returned approximately $178 million to its Shareholders through the payment of $28 million in dividends and the repurchase of approximately $150 million in common stock under an accelerated share repurchase program with a third party financial institution. On September 6, 2013, pursuant to the accelerated share repurchase program, the Company advanced the $150 million to the financial institution and received approximately 11.5 million shares of the Company’s common stock. The specific number of shares that the Company ultimately will repurchase under the accelerated share repurchase program will be determined based generally on a discount to the volume-weighted average price per share of the Company’s common stock during a calculation period to be completed in fourth quarter 2013. 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.
For the nine months ended September 30, 2013, net cash provided by operations was $2.2 billion, and capital expenditures were $995 million, resulting in free cash flow of approximately $1.2 billion. For the nine months ended September 30, 2013, the Company repurchased approximately $501 million in common stock, or approximately 38 million shares. Since August 2011, the Company has repurchased approximately $1.1 billion, or approximately 111 million shares, of common stock under its $1.5 billion share repurchase authorization. The Company repaid $267 million in debt and capital lease obligations during the nine months ended September 30, 2013, and intends to repay approximately $46 million more in debt and capital lease obligations during fourth quarter 2013.
Copyright Photo: Brian McDonough/AirlinersGallery.com. Southwest Airlines’ Boeing 737-7H4 WL N781WN (msn 30601) “New Mexico One” arrives in Washington (Reagan National).
Southwest Airlines (Dallas) has fired the captain who crash landed the Boeing 737-700 with the nose gear first at New York’s La Guardia Airport on July 22. According to the NTSB, the captain took control of the aircraft at 400 feet before the mishap. The first officer will receive additional training according to the report by Reuters.
Read the full report by Reuters: CLICK HERE
Read about the NTSB report: CLICK HERE
Read the full report about the accident: CLICK HERE
Southwest Airlines (Dallas) today (September 30) broke ground on a new international terminal at William P. Hobby Airport (HOU), marking the official start of construction on the $156 million project.
Once completed, the five-gate facility will accommodate regional international flights for Southwest Airlines, with service reaching destinations in the Caribbean, Mexico, and the northern cities of South America.
Houston Mayor Annise Parker, as well as local and state dignitaries, joined Southwest Airlines Employees in the brief ceremony before work immediately began.
A 2012 study commissioned by the Houston Airport System indicates that the new terminal will generate more than 10,000 jobs across the Greater Houston metropolitan area and will provide an economic impact of $1.6 billion. The study estimates that the terminal will bring in an additional 1 million passengers a year to Hobby Airport.
The terminal project, fully funded by Southwest Airlines, includes a new five-gate international terminal, expansion of the existing security checkpoint, and upgrades to the Southwest Airlines ticketing counter area.
In support of the project, and in anticipation of the expected increase in passenger traffic, the Houston Airport System will be making significant investments of its own, constructing a new multi-level parking garage and making improvements to the existing roadway system.
Southwest Airlines anticipates its first international flights out of Houston Hobby’s new international terminal will begin in late 2015 to destinations in the Caribbean, Mexico, and the northern cities of South America.
Copyright Photo: Fernandez Imaging/AirlinersGallery.com. Boeing 737-7H4 N279WN (msn 32532) with the special “Summer of Love – Cirque du Soleil” emblem taxies at the Houston (Hobby) hub.
Delta Air Lines (Atlanta) has painted its first former AirTran Airways Boeing 717-200 in Delta colors. The first aircraft is N935AT. As previously reported, Delta will be leasing the entire AirTran fleet of 88 Boeing 717s from Southwest Airlines (Dallas). The new type will be introduced on September 19 between the Atlanta hub and Newark. The DL 717s will feature 12 seats in First Class, 15 seats in Economy Comfort and 83 seats in Economy.
Delta issued this statement with the photos:
We are excited to share some pictures of the first Delta 717 all dressed up in its new paint job. You’ll notice the ship number – 9564 – is a nod to the 717’s original MD-95 moniker. In total, Delta will be receiving 88 of these aircraft updated with bright new interiors. Here are the details of what you can expect when they take to the skies this fall:
• 12 Zodiac 6810 seats in a 2 x 2 configuration
• 37” of seat pitch
• 19.6” of seat width
• 110v AC and USB in-seat power
• 15 Zodiac 5751 seats at 34” pitch in a 2 x 3 layout
• “Slim-line” seat provides more personal space
• 4-way adjustable headrests
• 18.1” of seat width
• 110v AC and USB in-seat power
• 83 Zodiac 5751 seats at 31” average pitch in a 2 x 3 layout
• “Slim-line” seat provides more personal space
• 4-way adjustable headrests
• 18.1” of seat width
• 110v AC and USB in-seat power
• New cool-white fluorescent lighting
• Onboard Wi-Fi
• Updated dark blue carpet and “Sky Diamond” bulkhead laminate
• Redesigned Economy Comfort & Economy seat covers with additional comfort padding
• New placards and signage
Top Copyright Photos: Delta Air Lines.
Video: Flight Simulation of a Delta 717 landing at Philadelphia:
Bottom Images: Delta Air Lines. Delta has been doing a great job of remembering its colorful past on social media.
Southwest Airlines (LUV) has announced the flight attendants from AirTran Airways (Dallas), a wholly-owned subsidiary of Southwest Airlines Company, have reached a tentative agreement on the collective bargaining agreement that became amendable in May 2013. AirTran flight attendants are represented by the Association of Flight Attendants-CWA (AFA). This tentative agreement still requires membership ratification.
The parties have been in discussions since February 2013 on an agreement that would serve as a bridge for the AirTran flight attendants until they ultimately transition to Southwest Airlines. To date, more than 400 flight attendants have made the transition, while approximately 1,700 flight attendants remain in the AirTran partition. Southwest Airlines finalized the closing of the acquisition of AirTran Holdings, Inc., on May 2, 2011.
Copyright Photo: Michael B. Ing/AirlinersGallery.com. The AirTran Boeing 737-700 fleet is also gradually transitioning to Southwest. The pictured 737-76N N279AT (msn 32666) is now N7719A with Southwest.
Have you seen the “new look” AirlinersGallery.com?
NTSB: The captain took over Southwest flight 345 seconds before its hard landing at New York LaGuardia Airport on July 22
The National Transportation Safety Board (NTSB) (Washington) has issued this statement regarding the investigation of the hard landing of Southwest Airlines (Dallas) flight 345 at New York (LaGuardia) on July 22, 2013:
In its continuing investigation of the July 22 accident in which Southwest Airlines flight 345, a Boeing 737-700, landed hard at New York’s LaGuardia Airport (LGA), the National Transportation Safety Board has developed the following factual information:
- The captain has been with Southwest for almost 13 years and has been a captain for six of those years. The captain has over 12,000 total flight hours, over 7,000 of which are as pilot-in-command. In 737s, the captain has over 7,900 hours, with more than 2,600 as the pilot-in-command.
- The first officer has been with Southwest for about 18 months. The pilot has about 5,200 total flight hours, with 4,000 of those as pilot-in-command. In 737s, the first officer has about 1,100 hours, none of which are as the pilot-in-command.
- This was the first trip the flight crew had flown together and it was the second leg of the trip. The first officer had previous operational experience at LGA, including six flights in 2013. The captain reported having flown into LGA twice, including the accident flight, serving as the pilot monitoring for both flights.
- The en route phase of the flight, which originated in Nashville, was characterized by the flight crew as routine. On approach into LGA, the first officer was the pilot flying and the captain was the pilot monitoring. SWA 345 was cleared for the ILS Runway 4 approach.
- The weather in the New York area caused the accident flight to enter a holding pattern for about 15 minutes. The crew reported that they saw the airport from about 5-10 miles out and that the airplane was on speed, course and glideslope down to about 200-400 feet.
- The crew reported that below 1,000 feet, the tailwind was about 11 knots. They also reported that the wind on the runway was a headwind of about 11 knots.
- SWA 345 proceeded on the approach when at a point below 400 feet, there was an exchange of control of the airplane and the captain became the flying pilot and made the landing.
- The jetliner touched down on the runway nose first followed by the collapse of the nose gear; the airplane was substantially damaged.
At this point in the investigation, no mechanical anomalies or malfunctions have been found. A preliminary examination of the nose gear indicated that it failed due to stress overload.
Investigators have collected five videos showing various aspects of the crash landing. The team will be analyzing these recordings in the coming months.
Parties to the investigation are the Federal Aviation Administration, Boeing Commercial Airplanes, Southwest Airlines, and the Southwest Airlines Pilots Association.
This is a factual update only and no interviews are being conducted.
Southwest Airlines (Dallas) is planning to add a single daily Atlanta-Washington (Reagan National) (DCA) flight on February 13, 2014 in addition to the existing five roundtrips flown by subsidiary AirTran Airways per Airline Route.
Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-8H4 WL N8315C (msn 38811) completes its approach into DCA from the south.
Southwest Airlines‘ (Dallas) Boeing 737-700 involved in the crash landing at New York’s LaGuardia Airport on July 22 landed with the nose wheel striking the runway first (the aircraft did not flare fro landing) according to the NTSB. The NTSB issued this statement:
The National Transportation Safety Board released factual information from the July 22 accident involving a Southwest Airlines Boeing 737-700 landing at New York’s LaGuardia Airport. The airplane’s front landing gear collapsed on landing.
- Evidence from video and other sources is consistent with the nose-gear making contact with the runway before the main landing gear.
- The flight data recorder on the airplane recorded 1,000 parameters and contained approximately 27 hours of recorded data, including the entire flight from Nashville to New York.
- The cockpit voice recorder contains a two-hour recording of excellent quality that captures the entire flight from Nashville to New York and the accident landing sequence.
- Flaps were set from 30 to 40 degrees about 56 seconds prior to touchdown.
- Altitude was about 32 feet, airspeed was about 134 knots, and pitch attitude was about 2 degrees nose-up approximately 4 seconds prior touchdown.
- At touchdown, the airspeed was approximately 133 knots and the aircraft was pitched down approximately 3 degrees.
- After touchdown, the aircraft came to a stop within approximately 19 seconds.
- A cockpit voice recorder group will convene at NTSB laboratories in Washington to transcribe the relevant portion of the accident flight.
Southwest Airlines reports a net profit of $224 million in the second quarter, removes the first AirTran Boeing 717
Southwest Airlines Company (Dallas) today reported its second quarter 2013 results. Second quarter 2013 net income was $224 million, or $.31 per diluted share, which included $50 million (net) of unfavorable special items. This compared to net income of $228 million, or $.30 per diluted share, in second quarter 2012, which included $45 million (net) of unfavorable special items. Excluding special items, second quarter 2013 net income was a record $274 million, or $.38 per diluted share, compared to $273 million, or $.36 per diluted share, in second quarter 2012. This was in line with the First Call consensus estimate of $.38 per diluted share. Additional information regarding special items is included in this release and in the accompanying reconciliation tables.
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “We are pleased to report record quarterly earnings of $274 million (excluding special items). This performance benefited from all-time high operating revenues and lower fuel prices. In addition, our focus on managing costs resulted in modest year-over-year cost inflation despite significant investments in fleet modernization and other strategic initiatives. I commend our hard-working and dedicated Employees for their efforts to achieve these excellent results, while simultaneously executing on our strategic initiatives.
“While the lingering effects of government sequestration and higher taxes continued to be a drag on air travel demand, second quarter 2013 revenues and passenger traffic still reached record levels. In addition, we are in the midst of integrating AirTran, launching new city-pairs, and optimizing the combined networks. We maintained strong load factors and ended the quarter with a record June load factor of 85.0 percent, which is notable considering the increasing mix of larger gauge 737-800s and Evolve -700s. Although the 2.4 percent year-over-year decline in second quarter unit revenues was below plan1, results improved throughout the quarter. Third quarter 2013 revenue trends are encouraging, thus far. To date, July unit revenues are approximately three percent above last year’s July, benefiting from Southwest and AirTran network connections and our gradual combined network optimization. Current bookings for the remainder of the third quarter also look solid.
“We remain on track with our plan to fully integrate AirTran into Southwest Airlines by the end of 2014. We are on schedule to complete the conversion of AirTran’s Boeing 737-700s to the Southwest livery and deploy the Southwest international reservation system next year. During second quarter, we transitioned one -700, bringing total aircraft conversions to 12 since the acquisition. Seven more -700 conversions are planned for this year, with the remaining 33 planned for next year in conjunction with the conversion of AirTran’s eight international markets. We will be transitioning AirTran’s 88 Boeing 717-200s out of the fleet, beginning next month.
“Connecting the Southwest and AirTran networks was a key milestone this quarter. As of April 14, Customers can now fly across our combined 97 destinations on a single itinerary. Our ability to optimize the combined networks and operations is enhanced significantly with connecting capabilities as we continue to transition AirTran markets to the Southwest network. Earlier this week, we extended our 2014 flight schedule through early March and announced new Southwest service between Hartsfield-Jackson Atlanta International Airport and Ronald Reagan Washington National Airport, beginning in February, which will augment AirTran’s five daily nonstop flights. During second quarter 2013, Southwest launched new service to Charlotte, North Carolina; Flint, Michigan; Portland, Maine; Rochester, New York; and Wichita, Kansas, which were all AirTran cities. We also began operating Southwest’s first scheduled service outside of the continental United States, with daily service to San Juan, Puerto Rico, beginning April 14th. By the end of 2013, we will have a Southwest presence in all AirTran domestic cities retained following the acquisition. While much of the converted capacity represents new city-pairs, we expect these new routes to develop rapidly. Our Cargo business also benefited from connecting the networks, coincident with the April 14th launch of cargo on AirTran under the Southwest brand.
“We are excited about our future network opportunities as we add international capabilities and continue the development of our domestic route network. We were thrilled to be awarded the slot exemption from the U.S. Department of Transportation to begin service between Houston Hobby and Ronald Reagan Washington National Airport next month. The introduction of this daily Southwest service will complete a triad of nonstop service options between Hobby and the Boston, New York, and Washington, D.C. metro areas.
“We continue to make progress on our fleet modernization efforts. During second quarter, we added three new Boeing 737-800s into service and retired two Boeing 737-300s. We also removed the first AirTran 717 from active service during the quarter in preparation for its transition out of the fleet next month. As of June 30, 2013, all Southwest Boeing 737-700s and 14 Boeing 737-300s have been retrofitted with the Evolve interior, and we plan to retrofit 64 additional -300s in the second half of this year. In May, we announced revisions to our future aircraft delivery schedule, including the launch of the Boeing 737 MAX 7 in 2019, with three objectives in mind: efficiently and aggressively manage our invested capital, shift the mix of new aircraft deliveries to the MAX, and replace Boeing 717s and Boeing 737s being retired over the next three years with more economical aircraft. This includes augmenting our Boeing orders with the acquisition of pre-owned aircraft. In line with our plan, available seat miles (capacity) for 2013 are estimated to increase two percent year-over-year as a result of larger gauge aircraft. For 2014, we currently plan to keep our capacity in line with 2013 as we continue to optimize our network and execute our strategic plan.
“Our fleet modernization and other fuel conservation efforts resulted in a 4.1 percent improvement in second quarter available seat miles per gallon. Second quarter economic fuel costs declined significantly to $3.06 per gallon, as expected, compared to second quarter 2012′s $3.22 per gallon. Based on our fuel derivative contracts and market prices as of July 22, third quarter 2013 economic fuel costs are expected to be in the $3.05 to $3.10 per gallon range, which is below third quarter 2012′s $3.16 per gallon.
“Our second quarter unit costs, excluding fuel, special items, and profitsharing, increased 1.7 percent, compared to second quarter last year. Based on current trends and benefits from our fleet modernization efforts, we expect our third quarter 2013 unit costs, excluding fuel, special items, and profitsharing, to increase slightly from third quarter 2012′s 7.72 cents.
“Our balance sheet and liquidity remain strong with approximately $3.7 billion in cash and short-term investments, as of yesterday, and a $1 billion fully available revolving credit facility. Our second quarter cash flow from operations was $778 million, and capital expenditures were $193 million, resulting in $585 million in free cash flow2. Our strong cash flow generation and record second quarter profits (excluding special items) reinforce the Board’s authorizations in May 2013 to increase our stock repurchase program from $1 billion to $1.5 billion, along with quadrupling our quarterly dividend to an estimated 1.2 percent annual yield (based on yesterday’s closing stock price of $13.76). During second quarter 2013, we returned approximately $279 million to our Shareholders through the payment of $28 million in dividends and the repurchase of approximately $251 million, or approximately 18 million shares, under an accelerated stock repurchase program completed in June. Since August 2011, we have repurchased approximately $975 million, or approximately 100 million shares, under our total $1.5 billion share repurchase authorization.”
The Company’s second quarter 2013 total operating revenues increased 0.6 percent to $4.6 billion, while operating unit revenues decreased 2.4 percent, on a 3.0 percent increase in available seat miles, and approximately four percent increase in average seats per trip, all as compared to second quarter 2012. Total operating expenses in second quarter 2013 increased 1.3 percent to $4.2 billion, as compared to second quarter 2012. The Company incurred costs (before taxes) associated with the acquisition and integration of AirTran, which are special items, of $26 million during second quarter 2013, compared to $11 million in second quarter 2012. Cumulative costs associated with the acquisition and integration of AirTran, as of June 30, 2013, totaled $363 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 second quarter 2013 were $4.2 billion, compared to $4.1 billion in second quarter 2012.
Second quarter 2013 economic fuel costs were $3.06 per gallon, including $.05 per gallon in unfavorable cash settlements for fuel derivative contracts, compared to $3.22 per gallon in second quarter 2012, including $.04 per gallon in unfavorable cash settlements for fuel derivative contracts. The Company has derivative contracts in place for approximately 80 and 85 percent of its estimated fuel consumption in the third and fourth quarters of 2013, respectively. As of July 22nd, the fair market value of the Company’s hedge portfolio through 2017 was a net asset of approximately $102 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.
Excluding fuel, special items, and profitsharing in both periods, second quarter 2013 operating costs increased 0.7 percent from second quarter 2012, and 1.7 percent on a unit basis.
Operating income for second quarter 2013 was $433 million, compared to $460 million in second quarter 2012. Excluding special items, operating income was $479 million for second quarter 2013, compared to $485 million in the same period last year.
Other expenses for second quarter 2013 were $70 million, compared to $92 million in second quarter 2012. This $22 million decrease primarily resulted from $47 million in other losses recognized in second quarter 2013, compared to $62 million in second quarter 2012. In both periods, these losses primarily resulted from 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, other losses were $12 million in second quarter 2013, compared to $14 million in second quarter 2012, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Third quarter 2013 premium costs related to fuel derivative contracts are currently estimated to be approximately $22 million, compared to $15 million in third quarter 2012. Net interest expense declined to $23 million in second quarter 2013, compared to $30 million in second quarter 2012, primarily due to the repayment of AirTran aircraft financing facilities during the first quarter of 2013.
For the six months ended June 30, 2013, total operating revenues increased 1.4 percent to $8.7 billion, while total operating expenses increased 1.2 percent to $8.2 billion, resulting in operating income of $503 million, compared to $481 million for the same period last year. Excluding special items, operating income was $591 million for first half 2013, compared to $495 million for first half 2012.
Net income for first half 2013 was $283 million, or $.39 per diluted share, compared to $327 million, or $.43 per diluted share, for the same period last year. Excluding special items, net income for first half 2013 was $328 million, or a record $.45 per diluted share, compared to $255 million, or $.33 per diluted share, for the same period last year.
The Company’s return on invested capital (before taxes and excluding special items) was approximately nine percent for the twelve months ended June 30, 2013. Additional information regarding pre-tax return on invested capital is included in the accompanying reconciliation tables.
For the six months ended June 30, 2013, net cash provided by operations was $1.8 billion, and capital expenditures were $727 million, resulting in free cash flow2 in excess of $1 billion. The Company repaid $216 million in debt and capital lease obligations during first half 2013, and intends to repay approximately $100 million more in debt and capital lease obligations during the remainder of the year.
Copyright Photo: Brian McDonough/AirlinersGallery.com. A beautiful banking shot of Boeing 737-8H4 WL N8322X (msn 36997) completing the River Approach into Washington’s Reagan National Airport (please click on the photo for the full-size view).
Southwest Airlines’ (Dallas) flight WN 345 from Nashville to New York (LaGuardia) operated with Boeing 737-7H4 N753SW (msn 29848) skidded off the runway last night (July 22) on landing at LGA ending up in the grass. After touchdown the nose wheel collapsed on landing, pressing back into the fuselage. Three passengers and five crew members were transported to a local hospital due to back and neck pain. The incident closed the airport and caused severe delays.
Southwest Airlines issued this statement:
Southwest Airlines flight 345 landed at New York’s LaGuardia at 5:40 PM Eastern Monday evening from Nashville. There were 150 people on board including Customers and Crew. Three Customers and five Crew Members were transported to local hospitals—all have been treated and released.
The aircraft, a Boeing 737-700, was last inspected July 18, 2013. The aircraft entered service in October 1999. Southwest is working with both the NTSB and Boeing in a preliminary investigation of this event.
Overnight, the aircraft was removed from the runway. Southwest has resumed full operations at LaGuardia.
We express our utmost gratitude to emergency responders and Southwest Employees who assisted us last night.
In other news, Southwest announced it will introduce new service between Hartsfield-Jackson Atlanta International Airport and Ronald Reagan Washington National Airport, beginning on February 13, 2014.
The new route is the next step in the integration process between Southwest Airlines and its wholly owned subsidiary, AirTran Airways. Hartsfield-Jackson Atlanta International is AirTran’s top airport in terms of daily departures, and Reagan National ranks eighth. In addition to the once-daily Southwest flight between Atlanta and Washington, D.C., AirTran will continue to operate five daily nonstop flights between the cities.
Southwest is also introducing a new nonstop flight between Baltimore/WashingtonInternational Airport and Dayton International Airport on February 13. Seasonal service between Reno/Tahoe and Chicago (Midway), Las Vegas and Albany, and Long Island MacArthur and Ft. Myers will resume on February 13, 2014.
Top Video: This video shows the aircraft landing.
Delta Air Lines (Atlanta) is planning to introduce the Boeing 717 on September 19 on the Atlanta-Newark route per Airline Route. Delta will lease all 88 AirTran Airways Boeing 717s from Southwest Airlines (Dallas). The first aircraft is due to be delivered next month and the 717s will be gradually phased in as AirTran retires the type.
Delta’s data sheet on the 717:
Southwest Airlines (Dallas) has issued this announcement about its new mascot on its Nuts About Southwest blog (written by Millie Richter Tidwell):
I think people are surprised when they learn that Southwest has a mascot—T. J. LUV.
I know I was.
T.J. sightings are rare as he only makes appearances at very special events, such as when we landed into a little place called Atlanta (pictured above). Curious about the history of this airline mascot, I did some digging and discovered this article that a previous intern, Lauren Webb, wrote last summer. I found it very interesting and thought you all would enjoy it too.
Now only if we could land our hands on the soundtrack …
Growing up, Southwest Airlines seemed to have always existed. And having been an infrequent flyer (I believe I took a total of three trips between the ages of one and 17), I never truly got the sense that Southwest’s origins were different from any other airline’s.
These first few weeks at Southwest have completely dispelled those beliefs. … for my first blog post ever, I would like to introduce one of the most adorable characters in Southwest’s history—T.J. LUV.
The inspiration for T.J. LUV came from the plump little jet in a children’s story Gumwrappers and Goggles (the tale of a jet) by Winifred Barnum Newman. Her story about T.J. (though Southwest and other airlines are never mentioned by name) might sound familiar to you.
A pilot and a lawyer wish to purchase an unwanted airplane to start an airline, but first need permission from “the Grand-Chancellor of Air-affairs and Bailiwicks.” At first the plane was afraid the men would never get permission and return, but a fairy told him to have “integrity” to get through the struggle to fly and to show them his spirit. “After a time he was moved to a smaller airport. …He did his best to give good customer service to everyone.” But the two bigger planes from his hangar (interestingly colored Braniff blue and Continental silver) went to the “Most High Court of the Air Kingdom” and claimed that he was stealing their business. Fortunately, the lawyer represented the airplane in court, even though “he had not had time to change out of his rumpled suit.” The deciding factor in the case was T.J. LUV’s moving speech: “I want to continue to carry business people to and from the big cities. I want to give them good service, make their flights smooth, and love, your Honor, I want to give love!” While he spoke, he turned gold with a red belly and red and orange tail stripe (our original colors).
Although missing our trademark ’70s hostesses and proclamations of love, the story sure sounds like Southwest. Our Founders were Rollin King, a pilot and business owner, and Herb Kelleher, then a lawyer, who would fight for several years to earn the right to fly (once even with Herb wearing a rumpled suit to court following an all-night preparation session for that day’s legal battles). And without a doubt, it was the integrity and stick-to-itiveness of our original Employees who made it possible for the story to even be written.
I heard about T.J. LUV pretty early into my Internship. What made me take a closer look was discovering the program for Show Your Spirit, the musical based on Newman’s book. It ran in 30 cities between August 1983 and March 1984 with a cast of 16 singers, dancers, and actors.
The musical had ten musical numbers, including “It Won’t Be Him,” in which the “Silver and Blue Crews are certain that the little dull grey plane will never be chosen to fly,” and “Colors,” in which T.J. is told “When you think of things, think of colors … Magic—Yellow, Love—Ruby Red…” But most exciting to me, the musical reflects its 1980s’ origins impeccably with reflective costumes.
Newman’s story and its musical adaptation capture the SOUTHWEST SPIRIT and early struggles perfectly. It’s a story of inner magic, integrity, stick-to-itiveness, and the love that leads us all to earn our Southwest colors, just like T.J. LUV.
Southwest Airlines (Dallas) and the DISH Network has announced a new partnership. The DISH Network Corporation issued this statement today:
DISH, the leading pay-TV provider, today announced “TV Flies Free” marking the first time TV entertainment is free for passengers aboard Southwest Airlines. Beginning today for Southwest Customers using iPhone®, iPad® and iPod touch®, or most other Internet-ready personal devices, DISH is providing free access to live TV and up to 75 on-demand shows on the airline’s more than 400 Wi-Fi-enabled aircraft.
The news was unveiled by DISH’s “Boston Guys” who surprised each of the passengers aboard a Southwest flight from Boston to Baltimore/Washington with a free iPad 2 on behalf of the two companies. Southwest Customers and Crew greeted the news with spirited applause, as for the first time, Customers flying on Southwest Airlines can stream directly to their personal devices live TV and up to 75 on demand titles for free, a savings of $5 per day. Over the past year, the “Boston Guys,” have popularized DISH’s Hopper® Whole-Home HD DVR with their Boston accents featured humorously in DISH’s “Hoppa” commercials.
“DISH and Southwest are two iconic American brands known for putting the customer first, providing products, services and experiences they truly demand,” said DISH President and CEO Joe Clayton. “It’s only logical our two companies should team up to give passengers free live TV and on-demand shows on flights around the country.”
Clayton added: “Customers using DISH’s award-winning DISH AnywhereTM and Hopper TransfersTM apps on their iPad can watch all their live TV, DVR recordings and on-demand shows anywhere, anytime via Wi-Fi connection or Hopper Transfers. Now, on Southwest, they can use an iPad to watch free live TV and on-demand shows. It’s a perfect fit.”
“Southwest Airlines continues to innovate and evolve our on-board Customer experience,” said Kevin Krone, Chief Marketing Officer at Southwest Airlines. “We started with Wi-Fi and now have expanded to television. This new offer puts free television in the hands of our Customers. Just one more way Southwest offers more value at 37,000 feet.”
In-air access to live TV, on-demand programming and Wi-Fi connectivity is delivered by Southwest’s satellite-based inflight entertainment and connectivity partner, Row 44, a subsidiary of Global Eagle Entertainment, Inc.
PROMOTION AND SERVICE DETAILS
As part of the agreement, DISH also announced a promotion for new DISH customers signing up for the Hopper Whole Home DVR and a qualified programming package, offering 12,500 points in Southwest’s Rapid Rewards frequent flyer program and the choice to receive an iPad 2. DISH is teaming up with Southwest Airlines for the nationwide marketing campaign to make its offer available to the airline’s Customers.
Southwest’s in-air live TV, delivered by connectivity partner Row 44, is available on most Internet-ready devices on most flights. The live-TV lineup currently features Bravo, CNBC, FOX 5 New York (WNYW), FOX Business Network, FOX News Channel, Golf Channel, MLB.com (Major League Baseball, when games are available), MSNBC, NBC 4 (WNBC), NFL Network, Food Network, HGTV and Travel Channel. Popular TV show episodes are also available on demand as part of the TV lineup. Free TV, compliments of DISH, is a limited-time promotion.
Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-8H4 WL N8609A (msn 36893) prepares to land at Washington (Reagan National).
Southwest Airlines (Dallas) and SeaWorld Parks & Entertainment™ (SEAS) celebrated 25 years of partnership today with the unveiling of the airline’s newest specialty aircraft, Penguin One— Boeing 737-7H4 N280WN (msn 32533) co-branded with images of one of SeaWorld®’s iconic animals.
Southwest and SeaWorld revealed the aircraft at a ceremony this morning at Orlando International Airport (MCO) with real penguins, Southwest and SeaWorld Employees, community members, and executives including Southwest Airlines Chairman, President, and CEO Gary Kelly and SeaWorld Parks & Entertainment President and CEO Jim Atchison. The plane, filled with Southwest and SeaWorld employees, also made stops in two other SeaWorld cities, San Antonio and San Diego.
The partnership between the two companies dates back to 1988, which began when SeaWorld opened in San Antonio. Southwest and SeaWorld launched their partnership in a high-flying way—with the introduction of a new Boeing 737, Shamu® One!
The featured penguin species on the aircraft is a gentoo, one of the species found at SeaWorld Orlando’s new Antarctica: Empire of the Penguin™. The attraction includes a first-of-its-kind family ride that transports guests into the penguins’ icy world.
This morning’s ceremony celebrated the introduction of Penguin One in a spirited way as attendees waved black-and-white pom poms, enjoyed black-and-white-themed snacks, and cheered as executives christened the aircraft while SeaWorld‘s Pete and Penny Penguin looked on.
Penguin One joins 12 other 737s in the Southwest fleet that carry a unique paint scheme: Shamu One, Shamu Two, Arizona One, California One, Colorado One, Florida One, Illinois One, Lone Star One (Texas), Maryland One, Nevada One, New Mexico One, and Triple Crown One (unveiled in 1997).
From the “Nuts About Southwest” blog (all photos by Southwest Airlines):
We kicked off Penguin One’s debut at Orlando International Airport (MCO) with more than 500 local Employees and community leaders, along with Southwest Airlines Chairman, President, and CEO Gary Kelly, and SeaWorld Parks & Entertainment CEO, Jim Atchison (shown below). Also on hand to meet the newest member of the family were famous SeaWorld mascots Pete and Penny Penguin, Penguin One’s real life counterparts (We think we got their approval!).
We had a lot of fun with our “Tuxedo” theme, as attendees waved black and white pom-poms, snacked on black and white themed snacks, and cheered as Kelly, Atchison, Pete and Penny, and the SeaWorld Aviculturists officially christened the aircraft. The celebration may have started in Orlando, but it didn’t end there! A team made up of Southwest Airlines and SeaWorld Employees boarded Penguin One and took the party to two other SeaWorld cities—San Antonio and San Diego—to celebrate with local Employees.
In 1988 when SeaWorld® opened in San Antonio, two great companies in the tourism world launched a new partnership in a high-flying way with the introduction of three co-branded 737 jets; Shamu One, born May 23, 1988; Shamu Two, born May 30, 1990; and Shamu Three, born September 7, 1990. Upon the retirement of Shamu One, we’re excited to welcome Penguin One to our fun fleet of SeaWorld specialty planes!
Penguin One Fun Facts:
- Born: June 20, 2013
- Hometown: Spokane, WA
- Resides in: 97 destinations in 41 states, the District of Columbia, the Commonwealth of Puerto Rico, and six near-international countries
- Length: 110 feet, 4 inches
- Weight: 84,100 lbs.
- Parents: Southwest Airlines Employees
- Seats: 143
- Hobbies include: Flying high, keeping Southwest Airlines’ Customers comfortable, and displaying a strong relationship between Southwest Airlines and SeaWorld Parks & Entertainment
- The largest penguin on Penguin One is over 26 feet long
Painting Process Facts:
- Penguin One is painted in seven different colors
- Nine day paint operation (24 hours around the clock) compared to the three day turnaround for our standard paint scheme
- 35 people over three shifts
- 100 gallons of paint applied to the fuselage
- The Gentoo penguins on Penguin One vary in length from 12 feet to more than 26 feet, about five to ten times the size of the average Gentoo penguin! The aircraft is also covered with a clear coat of paint to protect the design and keep Penguin One looking great for years to come.
Meet the Rest of Our Specialty Fleet
- Shamu Two - May 30, 1990
- Shamu Three - Sept. 7, 1990
- Lone Star One - Nov. 7, 1990
- Arizona One - May 23, 1994
- Triple Crown - June 9, 1997
- California One - Sept. 19, 1998
- Nevada One - June 12, 1999
- New Mexico One - Sept. 18, 2000
- Maryland One - June 14, 2005
- Illinois One - April 14, 2008
- Florida One - April 23, 2010
- Colorado One - August 22, 2012
Boeing (Chicago) announced today that first delivery of the 737 MAX 8 to launch customer Southwest Airlines (Dallas) will be a quarter earlier than originally scheduled – in the third quarter of 2017 instead of fourth quarter.
“Through our disciplined development on the 737 MAX program, the team has retired key technology risks,” said Scott Fancher, vice president and general manager, Airplane Development, Boeing Commercial Airplanes, during a briefing at the 2013 Paris Air Show. “We have informed our customers and they are pleased they will be able to put these more fuel-efficient airplanes in their fleets sooner than planned.”
Since launch in August 2011, the 737 MAX team has worked to define the final configuration of the airplane including new LEAP-1B engines from CFM International, a redesigned tail cone and the Advanced Technology winglet. Testing in the wind tunnel and data analysis prove that the 737 MAX configuration, set to be final in July, will give customers a 13 percent fuel-burn improvement over today’s most fuel efficient single-aisle airplanes.
The work done by Boeing has enabled the program to accelerate the 737 MAX schedule. “We continue to follow our knowledge points through the development process and we have an executable plan. Testing, improvement workshops, and solid early data have allowed us to validate the airplane’s performance and move the schedule forward,” said Fancher.
Image: Boeing. The Boeing 737 MAX will feature new large-format flight deck displays supplied by Rockwell Collins. The new displays will deliver enhanced visuals, improved reliability, lower spares and maintenance costs, lower weight and lower upgrade costs over the life of the airplane. The flight deck layout will maintain operational commonality with the Next-Generation 737 on entry-into-service of the 737 MAX while preparing the airplane for future flight deck capabilities.
Pictured here is an artist’s rendering of the 737 MAX flight deck with the four new large format displays.
Southwest Airlines (Dallas) has always cultivated a fun atmosphere (within FAA regulations) onboard its aircraft. Flight Attendants have often make the standard announcements interesting with their own take and style. The Travelin’ Taylor Tour: Vintage Trouble gave an impromptu concert at 35,000 feet on this select WN flight.
Here is “Nuts About Southwest” explanation of Vintage Trouble:
What is Vintage Trouble? Or, more Appropriately, who are Vintage Trouble? Four classy dudes decked out in suits, with a pretty solid taste in shoes, and the ability to rock out pretty hard. did not learn until I actually did this video Vintage Trouble got its name from the song that’s featured in the vid ” Blues Hand Me Down. ” If you have not watched, you may be trying to connect the dots; during the song, singer Ty Taylor sings, “I come from Vintage Trouble look out upon the one you found.” Before the explanation, I simply thought it was a sort of homage, or self-prescribed call-out. Either way, I dug it, as the mid-song proclamation has a particularly (and literally) titular way about it, like when you hear the name of a movie in an hour and chills run up your spine Because you feel like you’re being let in on some big secret meaning. The second song (featured below) is of a more sentimental persuasion. “Nancy Lee” is a groovy tune written about what Ty imagines his father what you like when he first laid eyes on Ty’s mom, and started making her his girl. Vintage Trouble So Took the stage as the headliner for this year’s Denver Day of Rock , a free day of music for Denver presented by Concerts for Kids to raise awareness for children. Southwest proudly partners with Concerts for Kids as a sponsor of the event to raise and distribute donations for more than 50 child-focused health and education organizations in the Denver area. This year’s event helped raise over $500,000!
Video: by bthomas.
Southwest Airlines (Dallas) officially landed in Wichita, Kansas. Southwest’s first flight arrived at Wichita Mid-Continent Airport on Sunday, June 2, and the airline will offer nonstop service to Dallas (Love Field), Chicago (Midway), and Las Vegas.
Southwest has fully converted all flying from its wholly-owned subsidiary, AirTran Airways, over to Southwest, which previously offered three daily nonstop flights between Wichita and Atlanta. With the introduction of Southwest’s all-Boeing 737 fleet to the market, passenger seat availability increases by 112 percent (over AirTran’s Boeing 717), an equivalent of 2,700 seats per week of additional low fares.
Southwest’s Wichita Service:
- Two daily nonstop flights between Wichita and Dallas Love Field
- Two daily nonstop flights between Wichita and Chicago Midway
- One daily nonstop flight between Wichita and Las Vegas
Top Copyright Photo: Keith Burton/AirlinersGallery.com. Southwest Airlines’ Boeing 737-7H4 WL N727SW (msn 27859) in the Nevada One motif arrives at Las Vegas.
Bottom Copyright Photos: Southwest Airlines (from the Nuts about Southwest blog):
ICT was excited to see WN and celebrated with not just one, but TWO cakes!
Ron Ricks and local mascots with our Make-A-Wish family
Southwest Airlines (Dallas) announced today that new service between Houston Hobby and Ronald Reagan Washington National Airport will begin on August 4, 2013. The airline initially will operate one daily roundtrip flight between the two cities.
The U.S. Department of Transportation (DOT) recently awarded slot exemptions for this service by selecting Southwest’s application over competing applications by other airlines to serve other cities from Reagan National Airport.
The new route completes a triad of nonstop service options between Houston and the metropolitan airports in Boston, New York, and Washington, DC.
Southwest has served Houston Hobby since June 18, 1971, and has more than 2,800 Houston-based employees and currently operates 153 daily departures from Hobby Airport. Earlier this year, the Houston City Council approved Southwest’s proposal to construct a new five-gate international facility at Hobby Airport. New near-international service on Southwest Airlines is scheduled to begin in 2015.
Copyright Photo: Tony Storck/AirlinersGallery.com. Boeing 737-8H4 WL N8610A (msn 36635) completes its final approach into nearby Baltimore/Washington.
Boeing (Chicago) and Southwest Airlines (Dallas) announced today the launch of the 737 MAX 7, the third member of the 737 MAX family. The carrier and launch customer for the 737 MAX program became the first airline to order the 737 MAX 7, when it converted 30 existing orders for Next-Generation 737s into orders for the 737 MAX 7.
Southwest also exercised options to add five more Next-Generation 737-800s to its fleet. These airplanes, along with the 737 MAX 7s, are part of Southwest’s ongoing effort to improve fuel efficiency and profitability. The 737 MAX 7 supports Southwest’s expanding fleet modernization effort. Southwest is expected to take its first 737 MAX 7 delivery in 2019.
“We are thrilled to announce that Southwest Airlines and Boeing have entered into an agreement for Southwest to be the launch customer for the Boeing MAX 7 series, with deliveries beginning in 2019,” said Gary C. Kelly, Southwest Airlines Chairman of the Board, President, and CEO. “The 737 MAX 7 builds on the strengths of today’s Next-Generation 737-700, incorporating the latest CFM International LEAP-1B engines is expected to reduce fuel burn and CO2 emissions by an additional 12 percent over today’s most fuel-efficient single-aisle airplane.”
The 737 MAX 7 (below) brings the most advanced engine technologies to the world’s best-selling airplane, building on the strengths of today’s Next-Generation 737-700. The 110-ft long airplane incorporates the latest CFM International LEAP-1B engines to deliver improved efficiency with the most reliability and passenger comfort in the single-aisle market. The 737 MAX 7 also will extend the range over today’s 737-700 by approximately 400 nautical miles (741 km).
“Southwest has been a valued partner in the evolution of the 737 program,” said Boeing Commercial Airplanes President and CEO Ray Conner. “We have worked together to launch several models of the 737 including the 737 MAX family in 2011. We are excited to bring the 737 MAX 7 to market with Southwest.”
With the MAX 7 conversions and exercised options for 737-800s, Southwest’s unfilled orders consist of 180 737 MAX airplanes and 137 Next-Generation 737s. The 737 MAX now has orders for 1,315 airplanes.
In other news, Southwest Airlines’ Board of Directors, at its meeting held today, significantly increased the Company’s quarterly dividend to $.04 per share from $.01 per share. Annualized, this amounts to over $100 million. The increase in the quarterly dividend will begin with the 147th consecutive quarterly dividend declared today to Shareholders of record at the close of business on June 5, 2013 on all shares then issued and outstanding. The dividend will be paid on June 26, 2013. The Board also increased the Company’s existing $1 billion share repurchase authorization to $1.5 billion. Of the remaining share repurchase authorization, an initial $250 million of Southwest common stock will be repurchased under an accelerated stock repurchase program.
Gary C. Kelly, Chairman of the Board, President, and CEO, stated: “Over the past 24 months, we have returned over 20 percent of our operating cash flows, or approximately $770 million, to Shareholders through share repurchases and dividends. I am pleased to announce several actions taken today by our Board that follow through with our commitment to deploy free cash flow1 to our Shareholders. The Board authorized an increase in our quarterly dividend payment to $.04 per share from $.01 per share. Based on yesterday’s closing stock price of $13.98, this would provide an approximate one percent annual dividend yield to our Shareholders. The Board also increased our existing $1 billion share repurchase authorization to $1.5 billion. To date, $725 million in share repurchases of the $1.5 billion authorization have been completed since August 2011. This means we have the authority to repurchase an additional $775 million of our common stock. We intend to execute an agreement today to repurchase $250 million of our shares under an accelerated stock repurchase program, which, upon implementation, will immediately bring shares back into the Company.
Top Copyright Photo: Brian McDonough/AirlinersGallery.com. With this announcement, Southwest exercised options to add five more Next-Generation 737-800s to its growing fleet. Boeing 737-8H4 WL N8308K (msn 36682) arrives at Washington (Reagan National).
Southwest Airlines (Dallas) has announced new service beginning in November to Memphis, Tennessee, Pensacola, Florida., and Richmond, Virginia, completing the planned arrival of Southwest’s Low Fares and Legendary Customer Service in 89 domestic destinations, including all previously served by wholly-owned subsidiary AirTran Airways.
The new nonstop service offered on both carriers comes as Customers are able to purchase itineraries among the two airlines’ combined 97 destinations, including international airports, in one transaction.
Beginning Sunday, November 3, Southwest Airlines will fly nonstop between:
- Memphis and Baltimore/Washington, Houston (Hobby), Orlando, Chicago (Midway), and Tampa
- Pensacola and Nashville and Houston (Hobby)
- Richmond and Orlando (AirTran Airways will continue to operate nonstop service between Richmond and Atlanta.)
AirTran Airways will start service between Memphis and Baltimore/Washington, Houston (Hobby), and Orlando on August 11, 2013.
Also timed with the extension of the flight schedule, AirTran Airways will begin new service in four airports in November.
Beginning Sunday, November 3, AirTran Airways will fly nonstop between:
- Oklahoma City and Atlanta and Chicago (Midway)
- Hartford/Springfield and Atlanta
- Louisville and Atlanta
- Norfolk/Virginia Beach and Atlanta
Southwest Airlines and wholly-owned subsidiary AirTran Airways, in addition to providing new destinations, added nonstop routes to and from airports they currently serve.
Additional New Service on Southwest Airlines Beginning November 3:
- One daily nonstop flight between Atlanta and New York (LaGuardia)
- One daily nonstop flight between Atlanta and West Palm Beach
- One daily nonstop flight between Atlanta and St. Louis
- One daily nonstop flight between Austin and New Orleans
Shifting from AirTran to Southwest Beginning November 3:
- One daily nonstop flight between Atlanta and San Juan, Puerto Rico
- One daily nonstop flight between Dayton and Orlando
- Two daily nonstop flights between Ft. Lauderdale and Philadelphia
- One daily nonstop flight between Ft. Lauderdale and Pittsburgh
- Two daily nonstop flights between Milwaukee and Ft. Myers
- One daily nonstop flight between Pittsburgh and Ft. Myers
Additional New Service on AirTran Airways Beginning November 3:
- One daily nonstop flight between Baltimore/Washington and Kansas City
- One daily nonstop flight between Columbus and Tampa Bay
- Two daily nonstop flights between Ft. Lauderdale/Hollywood and Jacksonville
Seasonal nonstop service will also begin on November 3 for both Southwest Airlines and AirTran Airways, providing Customers a way to travel to popular Florida destinations.
Seasonal Nonstop Service Beginning November 3 between:
- Ft. Lauderdale/Hollywood and Albany, Columbus, Indianapolis, Kansas City, and Raleigh-Durham
- Ft. Myers and Hartford/Springfield, Boston Logan, Akron-Canton, and Philadelphia
- Orlando and Detroit
- Tampa and Norfolk/Virginia Beach
- West Palm Beach and Philadelphia
In other news, Southwest has been awarded two slot exemptions (one daily round trip) from the DOT to operate new service from Houston’s William P. Hobby Airport to Reagan National creating the only nonstop service between DCA and HOU.
Copyright Photo: Tony Storck. Boeing 737-8H4 WL N8314L (msn 36990) arrives at Baltimore/Washington.
Southwest Airlines (Dallas) is changing its Atlanta operation in order to better compete against Delta Air Lines (Atlanta) for business customers. The airline, according to this Bloomberg report, will have no more than 20 aircraft on the ground at any time at ATL instead of current 30 (including the shrinking AirTran Airways). This will allow the 175 daily flights to be spread more evenly throughout the day according to the airline. The new strategy and schedule will become effective in November.
Read the full report: CLICK HERE
Copyright Photo: Fernandez Imaging. Boeing 737-3H4 N629SW in the second Silver One scheme taxies at Houston (Hobby).
Southwest Airlines Company (Southwest Airlines) (Dallas) today reported its first quarter 2013 results. First quarter 2013 net income was $59 million, or $.08 per diluted share, which included $6 million (net) of favorable special items. This compared to net income of $98 million, or $.13 per diluted share, in first quarter 2012, which included $116 million (net) of favorable special items. Excluding special items, first quarter 2013 net income was $53 million, or $.07 per diluted share, compared to a net loss of $18 million, or $.02 loss per diluted share, in first quarter 2012. This exceeded the First Call consensus estimate of $.02 per diluted share. Operating income for first quarter 2013 was $70 million, compared to $22 million in first quarter 2012. Excluding special items, operating income was $112 million for first quarter 2013, compared to $10 million in the same period last year. Additional information regarding special items is included in this release and in the accompanying reconciliation tables.
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “The significant year-over-year improvement in our first quarter results (excluding special items) was driven by record first quarter revenues and a better-than-expected cost performance. On relatively flat available seat miles year-over-year, total operating revenues of $4.1 billion increased 2.3 percent, or 1.8 percent on a unit basis, compared to first quarter last year. Passenger revenues were boosted significantly by continued progress on the AirTran integration, fleet modernization efforts, and the Rapid Rewards loyalty program. Year-over-year passenger unit revenue trends were relatively stable through February, and while worse than expected, March passenger unit revenues outperformed the domestic industry, on a capacity adjusted basis. Soft revenue trends have continued, thus far, in April, and we expect a year-over-year decline in our April passenger unit revenues. While we are cautious about April trends and the potential effects from government sequestration, recent bookings for May and June have been solid, and lower fuel prices have roughly offset the revenue weakness thus far in April.
“Based on market prices as of April 22nd, second quarter 2013 economic fuel costs, including fuel taxes, are expected to be in the $3.00 to $3.05 per gallon range, well below second quarter 2012′s $3.22 per gallon, including fuel taxes, and below the original forecast included in our 2013 plan1. Also, we now have derivative contracts in place for the remainder of the year that support estimated fuel costs per gallon below our 2013 plan. First quarter 2013 economic fuel costs were $3.29 per gallon, which was in line with our expectation, and 4.4 percent lower than first quarter 2012′s all-time high $3.44 per gallon.
“We are pleased with the early results from revenue initiatives implemented in first quarter 2013 and are excited about the incremental benefit expected for future periods. We launched some of our new 2013 ancillary revenue streams, including selling open premium boarding positions at the gate, increasing our EarlyBird Check-In™ charge, and increasing certain other fees.
“We also phased in the ability for our Customers to fly connecting itineraries between the Southwest and AirTran networks, our top priority this year. As of April 14th, all 97 destinations within the combined networks can be flown on a single itinerary, a key milestone of our AirTran integration. Bookings on these connecting itineraries, thus far, have been strong, giving us further confidence in our plan to achieve $400 million in net, pre-tax, AirTran synergies in 2013 (excluding acquisition and integration costs). With connecting capabilities in place, our ability to optimize the combined networks and operations is enabled, particularly in Atlanta. This is a significant milestone. We are now in a position to evolve Atlanta to a point-to-point operation in fall 2013, similar to our other top ten Southwest cities. This will allow our People to be substantially more productive through scheduling our aircraft, flight crews, and ground staff more constantly throughout the day. Our November schedule (which will open next month) will offer our Atlanta Customers a wider selection of departure times throughout the day, with roughly the same number of daily departures. We expect these changes will grow our local Atlanta traffic.
“We are enthused about planned initiatives for the remainder of the year. Today, we are announcing details of a new No Show policy that will apply to Southwest reservations that include Wanna Get Away® or DING!® fares and are made on or after May 10, 2013, for travel on or after September 13, 2013. The policy is intended to alter behavior, encouraging Customers to cancel unused nonrefundable fares prior to a flight’s departure, allowing us to better predict future inventory and reduce the number of empty seats on aircraft. Also, later this quarter, we will implement phase one of our new revenue management system.
“While we continue to optimize our network and maintain a relatively flat fleet in 2013, we are also making excellent progress on our fleet modernization efforts. Thus far this year, we have taken delivery of nine new Boeing 737-800s and two used Boeing 737-700s, retired three older Boeing 737-300s and one Boeing 737-500, and retrofitted more -700s with our new Evolve interior. As of
March 31, 2013, nearly 90 percent of the Southwest -700 fleet had the Evolve interior, and we expect to complete the remainder of the Southwest -700 retrofits in second quarter 2013. Further, all of Southwest’s -800s and -700s are now equipped with WiFi technology.
“We began operating Southwest’s first scheduled service outside of the continental United States on April 14th, with daily service to San Juan, Puerto Rico, from Orlando and Tampa Bay, Florida. These flights augment AirTran’s existing service between San Juan and Atlanta, Georgia; Baltimore/Washington; and Fort Lauderdale, Florida. Since the beginning of the year, Southwest has also launched service to Branson, Missouri; Charlotte, North Carolina; Flint, Michigan; Portland, Maine; and Rochester, New York. We are excited about our growing network and opportunities ahead. Further, as part of the Dallas Love Field Modernization project, we reached a significant milestone at our hometown airport with the opening of 11 brand new Southwest gates and new concessions on April 16th. This impressive project is on budget and on track for full completion in second half 2014.
“Our balance sheet and liquidity remain strong with approximately $3.1 billion in cash and short-term investments at March 31, 2013. Earlier this month, we replaced our $800 million revolving credit facility with a new $1 billion five-year revolving credit facility. The $200 million increase enhances our liquidity and financial flexibility. Despite the uncertainties surrounding the impact to travel demand from government sequestration and increased consumer taxes, we remain focused on our 2013 plan to achieve a 15 percent pre-tax return on invested capital. In first quarter, we returned $115 million to our Shareholders through repurchasing $100 million of common stock (approximately 9 million shares) and distributing $15 million in dividends.”
No Show Policy
Southwest is implementing a No Show policy that applies to nonrefundable fares that are not canceled or changed by a Customer prior to a flight’s scheduled departure. If a Customer has booked a nonrefundable fare anywhere in his/her itinerary and that portion of the flight is not used and not canceled or changed by the Customer prior to scheduled departure, all unused funds on the full itinerary will be lost, and the remaining reservation will be canceled. The policy applies to reservations made or changed on or after Friday, May 10, 2013, for travel on or after Friday, September 13, 2013. This policy does not apply to military fares, senior fares, or travel during certain irregular operations, including severe weather conditions.
The No Show policy will not impact Customers who simply cancel a Wanna Get Away or DING! fare prior to scheduled departure; in this case, Customers may reuse their funds toward future travel on Southwest, without a change fee, as they have always done. Customers who are traveling on a fully refundable itinerary that does not contain a Wanna Get Away or DING! fare will continue to have the option of either requesting a refund or holding funds for future travel.
Financial Results and Outlook
The Company’s total operating revenues in first quarter 2013 were $4.1 billion, compared to $4.0 billion in first quarter 2012. Operating unit revenues increased 1.8 percent from first quarter 2012. Total first quarter 2013 operating expenses of $4.0 billion were comparable to first quarter 2012. The Company incurred $13 million in special charges (before taxes) during the first quarters of 2013 and 2012 associated with the acquisition and integration of AirTran. Cumulative costs associated with the acquisition and integration of AirTran, as of March 31, 2013, totaled $337 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 the first quarters of 2013 and 2012, operating expenses were approximately $4.0 billion in both periods.
First quarter 2013 economic fuel costs, including fuel taxes, decreased 4.4 percent to $3.29 per gallon, compared to $3.44 per gallon in first quarter 2012. The Company now has derivative contracts in place for approximately 95 percent of its estimated fuel consumption for the remainder of the year. As of April 22nd, the fair market value of the Company’s hedge portfolio through 2017 was a net liability of approximately $151 million, compared to a net asset of $200 million at March 31st. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.
First quarter 2013 profitsharing expense was $15 million, compared to no profitsharing expense in first quarter last year. Excluding fuel, profitsharing, and special items in both periods, first quarter 2013 unit costs increased 2.8 percent from first quarter 2012, which was better than expected largely due to lower workers’ compensation claims, favorable airport settlements, and lower advertising expense. Based on current cost trends, the Company expects a similar year-over-year increase in its second quarter 2013 unit costs, excluding fuel, profitsharing, and special items in both periods.
Operating income for first quarter 2013 was $70 million, compared to $22 million in first quarter 2012. Excluding special items, operating income was $112 million for first quarter 2013, compared to $10 million in first quarter 2012.
Other income for first quarter 2013 was $24 million, compared to $137 million in first quarter 2012. This $113 million decrease primarily resulted from $46 million in gains recognized in first quarter 2013, compared to $170 million in gains in first quarter 2012. In both periods, these gains primarily resulted from 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, other losses were $5 million in first quarter 2013, compared to $6 million in first quarter 2012, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Second quarter 2013 premium costs related to fuel derivative contracts are currently estimated to be approximately $12 million, which is comparable to second quarter 2012. Net interest expense declined to $22 million in first quarter 2013, compared to $33 million in first quarter 2012, primarily as a result of the Company’s repayment of its $385 million 6.5 percent notes in March 2012.
Net cash provided by operations was $983 million, and capital expenditures were $534 million, resulting in $449 million in free cash flow2 in first quarter 2013. The Company repaid approximately $164 million in debt and capital lease obligations during first quarter 2013, and intends to repay approximately $149 million in debt and capital lease obligations during the remainder of the year. As of April 23rd, the Company had approximately $3.2 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion.
The Company’s return on invested capital (before taxes and excluding special items) was approximately 8 percent for the twelve months ended March 31, 2013. Additional information regarding pre-tax return on invested capital is included in the accompanying reconciliation tables.
Southwest Airlines Awards and Recognitions
- Named seventh Most Admired Company in the world by FORTUNE Magazine
- Recognized as the top travel brand and fifth overall brand by The Business Journals in the American Brand Excellence Awards
- Named Domestic Carrier of the Year by the Airforwarders Association
- Named to the Airline of the Year list by the Express Delivery and Logistics Association
- Awarded the Air Cargo Excellence Diamond Award by Air Cargo World
- Named number one in Customer Service by the 2013 Airline Quality Ratings
- Recognized as one of the 2013 100 Best Corporate Citizens by CR Magazine
- Awarded the Grassroots Innovation Award for the Free Hobby Campaign by the Public Affairs Council
Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-7H4 WL N240WN (msn 32503) with “Live in the Vineyard” promotional decal arrives at Baltimore/Washington.