Category Archives: Southwest Airlines

Southwest Airlines begins operating new flights

Southwest Airlines Boeing 737-76N WL N7705A (msn 32744) BWI (Ron Monroe). Image: 944274.

Southwest Airlines has begun to operate several new routes just in time for the holiday season.

More Options for California Travelers
Northern California Expansion

Southwest continues complementing its robust service for California travelers by strengthening its commitment to San Jose, California. By the end of this month, the carrier will offer up to 98 departures a day to more than two dozen destinations across the United States and Mexico.

To reach that milestone, the carrier began service today between:

San Jose, Calif. and Tucson, Ariz. (nonstop itineraries are available Sundays-Fridays)

Starting Monday, Nov. 5, 2018, the carrier will increase the number of weekday flights between:

San Jose, Calif. and Portland, Ore. (eight roundtrips on weekdays, an increase of two flights each weekday)
San Jose, Calif. and Orange County/Santa Ana (11 roundtrips on weekdays, an increase of one flight each weekday)

Burbank’s New Flights Take Off
Today, the carrier also added nonstop service between:

Burbank and Houston (Hobby) (nonstop itineraries are available Sundays-Fridays)
Burbank and Chicago (Midway) (nonstop itineraries are available Sundays-Fridays)

Growing In the Nation’s Capital
Southwest is growing its presence at Washington, D.C.’s Reagan National airport with more service. The carrier began nonstop service today between Oklahoma Cityand Washington, D.C. (Reagan National).

More weekday service begins Monday, Nov. 5, 2018, with one additional roundtrip flight between:

Washington, D.C. (Reagan National) and Nashville (an increase to four weekday roundtrip flights)
Washington, D.C.
(Reagan National) and Dallas (an increase to five weekday roundtrip flights)

Nonstop Between the Big Easy and the Big Apple
Beginning today, Southwest began operating daily flights between New York(LaGuardia) and New Orleans.

On Monday, Nov. 5, 2018, the carrier will add one additional frequency on routes it currently serves between:

New York (LaGuardia) and Dallas Love Field (an increase to five weekday roundtrip flights)
New York (LaGuardia) and Denver (an increase to three weekday roundtrip flights)
New York (LaGuardia) and Kansas City, Mo. (an increase to two weekday roundtrip flights)

With these new additions, Southwest will offer up to 35 flights a day from LaGuardia.

Passport Stamps for the Holidays
Southwest also began weekend service between Chicago (Midway) and Cabo San Lucas/Los Cabos, Mexico.

Additionally, seasonal daily international service returned on routes between:

Austin and Cancun
Denver and Puerto Vallarta
Ft. Lauderdale/Hollywood and Belize
Ft. Lauderdale/Hollywood and Grand Cayman
Ft. Lauderdale/Hollywood and Turks and Caicos
Houston (Hobby) and Liberia, Costa Rica
St. Louis and Cancun

On Saturday, Nov. 10, 2019, the carrier will resume weekly seasonal service on Saturdays between:

Nashville and Cancun
Columbus, Ohio and Cancun
Indianapolis and Cancun

Even More Nonstop Flights Take Off
Today, the carrier began daily nonstop service linking Denver and Lubbock. Additionally, the airline began nonstop flights on Sundays between Houston (Hobby) and Philadelphia and Houston (Hobby) and Sacramento.

Top Copyright Photo (all others by Southwest): Southwest Airlines Boeing 737-76N WL N7705A (msn 32744) BWI (Ron Monroe). Image: 944274.

Southwest aircraft slide show:

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Southwest reports a third quarter profit

Southwest Airlines Boeing 737-8 MAX 8 N8705Q (msn 42558) LAX (Michael B. Ing). Image: 944056.

Southwest Airlines Company today reported its third quarter 2018 results:

 

  • Record third quarter net income of $615 million
  • Net income of $614 million, excluding special items1
  • Record third quarter earnings per diluted share of $1.08
  • Operating income of $798 million, or $796 million, excluding special items
  • Operating margin2 of 14.3 percent, and net margin3 of 11.0 percent
  • Operating cash flow of $1.3 billion, and free cash flow1 of $817 million
  • Returned $591 million to Shareholders through a combination of share repurchases and dividends
  • Return on invested capital (ROIC)1 pre-tax of 23.4 percent for the 12 months ended September 30, 2018, or 18.1 percent on an after-tax basis

 

Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, “I want to congratulate our Employees on an excellent third quarter 2018 performance, resulting in record third quarter earnings per diluted share. The significant increase in our third quarter 2018 earnings per diluted share was driven by record third quarter operating revenues, lower federal income taxes, and a 4.8 percent year-over-year reduction in share count. Despite higher jet fuel prices and other cost pressures, we grew our third quarter 2018 net margin, year-over-year, which is a notable accomplishment.

“I am grateful to our People for their hard work and resilience, as we continue to consistently deliver stellar margins and returns. With these results, we accrued an additional $135 million in profitsharing for the benefit of our Employees and provided $591 million of share buybacks and dividends for our Shareholders.

“As we finish the year, our revenue momentum has continued into fourth quarter 2018, thus far. Unit revenue trends are stable and have recovered nicely from first half 2018. We are particularly pleased with the performance of our new revenue management tools. With our new reservation system in place since last year, we have more capabilities and are well-positioned to drive revenue growth. We expect $80 million to $90 million of year-over-year improvement in fourth quarter 2018 pre-tax results from these enhanced capabilities, which is in line with our annual 2018 pre-tax goal of $200 million.

“On the cost side, our third quarter 2018 unit cost performance was in line with our expectations. Our fuel hedge portfolio mitigated a significant portion of market jet fuel price increases, and we are pleased with the fuel hedge in place for both fourth quarter 2018 and annual 2019. Based on current trends, we continue to expect modest year-over-year inflation in our annual 2018 unit costs, excluding fuel and oil expense and profitsharing expense.

“Based on our second half 2018 revenue trends, we are well-positioned for year-over-year unit revenue growth in 2019, with easier year-over-year comparisons in first half. We also will continue to experience year-over-year unit cost inflation in 2019, excluding fuel and oil expense and profitsharing expense, of at least three percent, as we continue investing in and deploying new operations, technology, and airport infrastructure to support future growth. With the 2017 retirement of our Boeing 737-300 Classic fleet, launch of the 737 MAX, and implementation of our new reservation system, we continue with our efforts to modernize our fleet, optimize our network, and pursue additional revenue opportunities. Given our healthy revenue outlook, and despite expected cost increases, our 2019 goal is to expand margins year-over-year. We are refocusing our efforts to control costs and drive efficiency, and, as ever, we remain steadfast in our efforts to produce industry-leading margins and superior returns in excess of our cost of capital.

“For next year, Hawaii is our expansion focus, and we continue to expect 2019 available seat miles (ASMs, or capacity) to increase no more than five percent, year-over-year.”

Revenue Results and Outlook
The Company’s third quarter 2018 total operating revenues increased 5.1 percent, year-over-year, to a third quarter record $5.6 billion. Third quarter 2018 operating revenue per ASM (RASM, or unit revenues) increased 1.2 percent, year-over-year, driven largely by a passenger revenue yield increase of 2.3 percent, year-over-year, offset slightly by a load factor decline of 0.9 points, year-over-year, to 83.9 percent. Third quarter 2018 RASM also included an approximate one-half point year-over-year positive impact as a result of approximately 2,200 flight cancellations in third quarter 2018, due to thunderstorms and weather-related disruptions (the “weather cancellations”).

Based on current bookings and yield trends, the Company expects fourth quarter 2018 RASM to increase in the one to two percent range, compared with fourth quarter 2017 RASM of 13.88 cents, as recast in accordance with Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (or the “New Revenue Standard”). The Company adopted the New Revenue Standard effective January 1, 2018, and utilized the full retrospective method of adoption allowed by the standard. As such, results for the three and nine months ended September 30, 2017, have been recast under the new standard in order to be comparable with current period results in the accompanying unaudited Condensed Consolidated Statement of Income. The Company’s third quarter 2018 year-over-year RASM increase included an approximate one point headwind from the change in the Rapid Rewards revenue recognition method as a result of the Company’s adoption of the New Revenue Standard. The Company continues to expect an immaterial impact to its fourth quarter and annual 2018 year-over-year RASM trends as a result of the New Revenue Standard.

Cost Performance and Outlook
Third quarter 2018 total operating expenses increased 7.2 percent, year-over-year, to $4.8 billion. Total operating expenses per ASM (CASM, or unit costs) increased 3.1 percent, as compared with third quarter 2017. Excluding special items in both periods, third quarter 2018 total operating expenses increased 8.1 percent to $4.8 billion, or 4.1 percent on a unit basis, year-over-year.

Effective January 1, 2018, the Company early adopted ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities. The new standard eliminated ineffectiveness for all derivatives designated in a hedge for accounting purposes, as well as changed the Company’s classification of premium expense associated with fuel hedges from Other (gains) and losses, net, to Fuel and oil expense within the unaudited Condensed Consolidated Statement of Income. As such, the classification of premium expense for the three and nine months ended September 30, 2017, has been recast under the new standard to be comparable with current period results.

Third quarter 2018 economic fuel costs1 were $2.25 per gallon and included $.06 per gallon in premium expense and $.10 per gallon in favorable cash settlements from fuel derivative contracts, compared with $2.07 per gallon in third quarter 2017, as recast, which included $.06 per gallon in premium expense and $.31 per gallon in unfavorable cash settlements from fuel derivative contracts. Third quarter 2018 ASMs per gallon, or fuel efficiency, improved 1.1 percent year-over-year, driven primarily by the retirement of the Classic fleet and the addition of more fuel-efficient 737-800 and 737 MAX 8 aircraft.

Based on the Company’s existing fuel derivative contracts and market prices as of October 19, 2018, fourth quarter 2018 economic fuel costs are estimated to be in the range of $2.30 to $2.35 per gallon4, including $.07 per gallon in premium expense and an estimated $.14 per gallon in favorable cash settlements from fuel derivative contracts, compared with $2.16 per gallon in fourth quarter 2017, as recast, which included $.07per gallon in premium expense and $.19 per gallon in unfavorable cash settlements from fuel derivative contracts. As of October 19, 2018, the fair market value of the Company’s fuel derivative contracts settling in fourth quarter 2018 was an asset of approximately $82 million, and the fair market value of the hedge portfolio settling in 2019 and beyond was an asset of approximately $521 million.

Based on the Company’s existing fuel derivative contracts and market prices as of October 19, 2018, annual 2019 economic fuel costs are estimated to be in the range of $2.35 to $2.40 per gallon4, including $.04 per gallon in premium expense and an estimated $.08 per gallon in favorable cash settlements from fuel derivative contracts. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding fuel and oil expense and special items in both periods, third quarter 2018 operating expenses increased 7.0 percent, as compared with third quarter 2017. Third quarter 2018 profitsharing expense was $135 million, as compared with $127 million in third quarter 2017. Excluding fuel and oil expense, profitsharing expense, and special items, third quarter 2018 operating expenses also increased 7.0 percent, or 3.0 percent on a unit basis, year-over-year. This increase was due primarily to shifting of spending from first half 2018 into third quarter 2018, higher maintenance and advertising expenses, and a nearly one-point year-over-year negative impact as a result of the third quarter 2018 weather cancellations.

Based on current cost trends, the Company estimates fourth quarter 2018 CASM, excluding fuel and oil expense and profitsharing expense, to be flat to up one percent, compared with fourth quarter 2017’s 8.82 cents, as recast, which excluded fuel and oil expense, profitsharing expense, and special items. The Company continues to estimate annual 2018 CASM, excluding fuel and oil expense and profitsharing expense, to be flat to up one percent, compared with annual 2017’s 8.47 cents, as recast, which excluded fuel and oil expense, profitsharing expense, and special items.

Third Quarter Results
Third quarter 2018 net income was a third quarter record $615 million, or a record third quarter $1.08 per diluted share, compared with third quarter 2017 net income of $528 million, or $.88 per diluted share. Excluding special items, third quarter 2018 net income was $614 million, or a third quarter record $1.08 per diluted share, compared with third quarter 2017 net income of $554 million, or $.93 per diluted share, and compared with First Call third quarter 2018 consensus estimate of $1.06 per diluted share.

The Company estimates its effective tax rate to be approximately 23 percent for annual 2018. For annual 2019, the Company estimates its effective tax rate to be approximately 23.5 percent.

Liquidity and Capital Deployment
As of September 30, 2018, the Company had approximately $3.8 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 2018 was $1.3 billion, capital expenditures were $454 million, and free cash flow was $817 million. The Company repaid $98 million in debt and capital lease obligations during third quarter 2018, and expects to repay approximately $87 million in debt and capital lease obligations during fourth quarter 2018.

During third quarter 2018, the Company returned $591 million to its Shareholders through the repurchase of $500 million in common stock and the payment of $91 million in dividends. The Company repurchased 8.2 million shares of common stock pursuant to a $500 million accelerated share repurchase program (ASR) launched during third quarter 2018 and completed earlier this month. The Company’s third quarter ASR completed the remaining $350 million of its previous $2.0 billion share repurchase program that had been authorized by its Board of Directors in May 2017, and initiated the $2.0 billion share repurchase program authorized by its Board of Directors in May 2018. The Company has $1.85 billion remaining under its current authorization.

For the nine months ended September 30, 2018, net cash provided by operations was approximately $3.9 billion. Capital expenditures, including net proceeds from assets constructed for others, were approximately $1.3 billion, and free cash flow was $2.6 billion. This enabled the Company to return approximately $1.8 billion to Shareholders through the repurchase of $1.5 billion in common stock and the payment of $332 million in dividends.

The Company continues to estimate its annual 2018 capital expenditures to be in the $2.0 to $2.1 billion range. For annual 2019, capital expenditures are expected to be similar to 2018 levels.

Fleet and Capacity
The Company ended third quarter 2018 with 742 aircraft in its fleet. This reflects the third quarter delivery of five new 737-800s and seven new 737 MAX 8s. The Company continues to expect to end 2018 with 751 aircraft in its fleet based on the current aircraft delivery schedule. Additional information regarding the Company’s aircraft delivery schedule is included in the accompanying tables:

The Company now expects its annual 2018 year-over-year ASM growth to be approximately four percent, slightly lower than previously expected, due primarily to the third quarter 2018 weather cancellations. The Company now expects fourth quarter 2018 year-over-year ASM growth to be in the 6.0 to 6.5 percent range.

1See Note Regarding Use of Non-GAAP Financial Measures for additional information on special items, free cash flow, and ROIC. In addition, information regarding special items, ROIC, and economic results is included in the accompanying reconciliation tables.
2Operating margin is calculated as operating income divided by operating revenues.
3Net margin is calculated as net income divided by operating revenues.
4Based on the Company’s existing fuel derivative contracts and market prices as of October 19, 2018, fourth quarter 2018 fuel costs per gallon on a GAAP and economic basis are both estimated to be in the $2.30 to $2.35 range, and annual 2019 fuel costs per gallon on a GAAP and economic basis are both estimated to be in the $2.35 to $2.40 range. See Note Regarding Use of Non-GAAP Financial Measures.

Top Copyright Photo (all others by Southwest): Southwest Airlines Boeing 737-8 MAX 8 N8705Q (msn 42558) LAX (Michael B. Ing). Image: 944056.

Southwest aircraft slide show:

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Southwest Airlines takes delivery of the last Boeing 737 Next Generation

Southwest Airlines on October 1, 2018 took delivery of its last Boeing 737 Next Generation aircraft (737-800 N8583Z, msn 64799). The airline announced the milestone on social media:

On October 1, 2018, we welcome our last delivery of @BoeingAirplanes 737 Next Generation aircraft to @SouthwestAir. We’re proud of our 21-year history with the aircraft, which will continue to serve us well for many years. Now, we look forward to our future with the 737 MAX 7 and 8 aircraft!

Photo: Southwest Airlines.

Southwest Airlines extends its flight schedule into June 2019

Named "The Rollin W. King"

Southwest Airlines today announced its bookable flight schedule has been extended through June 8, 2019.

The extension brings an additional new nonstop route linking San Jose, California, and El Paso once weekly on Sundays beginning April 14, 2019, as well as resuming Sunday service between San Jose, California, and New Orleans.

Seasonal Service Resumes

The carrier will resume daily seasonal service on April 8, 2019, between Dallas Love Field and Pensacola, Florida.

On Saturday, April 13, 2019, Southwest will also resume seasonal service on Saturdays between:

Albuquerque and Orlando
Boston and Orlando
Charleston, S.C., and Denver
New Orleans and Cancun
Kansas City, Missouri, and Pensacola, Florida.

Fall Flights – Ready for Take Off!

In the coming days, the carrier’s previously-published autumn 2018 schedule will begin to take flight. Beginning October 3, 2018, Southwest will operate nonstop service between:

Columbus, Ohio, and Houston (Hobby)
Louisville, Ky., and Houston (Hobby)
Memphis and Denver
Albany and Las Vegas*
*This seasonal flight operates every day except on Saturdays

On Saturday, October 6, 2018, the carrier also will begin seasonal nonstop service weekly on Saturdays between Cleveland and Orlando, and Milwaukee and Fort Myers, Florida. The following day, the carrier will launch Sunday-only service between Oklahoma City and Nashville, Denver and El Paso, and Oakland, California and Tucson, Arizona.

Top Copyright Photo: Southwest Airlines Boeing 737-7H4 WL N417WN (msn 29822) SNA (Michael B. Ing). Image: 943664.

Southwest Airlines aircraft slide show:

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Southwest Airlines and Build-A-Bear partner to take bear hugs to new heights in celebration of National Teddy Bear Day 2018

Southwest Airlines has made this announcement:

Southwest Airlines and Build-A-Bear Workshop, Inc., are taking teddy bear hugs to new heights in celebration of National Teddy Bear Day, which occurs each year on September 9. Together, Southwest® and Build-A-Bear are teaming up to donate 20,000 Build-A-Bear teddy bears to 36 children’s hospitals that are recipients of the airline’s Medical Transportation Grant Program, as well as Southwest charitable partners: Make-A-Wish® and Ronald McDonald House Charities (RMHC).

In anticipation of National Teddy Bear Day 2018, the carrier and Build-A-Bear are donating the following:

  • More than 7,100 bears to 91 Ronald McDonough House Charities
  • More than 2,400 bears to Make-A-Wish chapters
  • More than 10,300 bears to 36 U.S. hospitals

Additionally, Southwest Employees and Build-A-Bear Workshop® associates are surprising Customers in 10 airports across the country with special Southwest and Build-A-Bear co-branded teddy bears. This is the first time Southwest and Build-A-Bear have teamed up, but the brands began discussing the partnership and designing the special co-branded bear in January 2018.

“At Southwest, we are committed to giving back in the communities where our Customers and Employees live and work,” said Laurie Barnett, Managing Director, Communications & Outreach, Southwest. “Through this partnership with Build-A-Bear, we are honored to lend a hand in donating these 20,000 teddy bears to deserving recipients at Ronald McDonald House Charities, Make-A-Wish, and children’s hospitals that are a part of the Southwest Medical Transportation Grant Program.”

“Our mission at Build-A-Bear is to add a little more heart to life, and there’s something so special and heartfelt about the comfort a teddy bear hug can provide,” said Sharon Price John, president and CEO, Build-A-Bear Workshop. “We are proud to partner with Southwest Airlines—which, like Build-A-Bear, is an iconic, beloved brand—to take teddy bear hugs to new heights and celebrate one of our favorite holidays in a fun, innovative way.”

The Southwest Airlines Medical Transportation Grant Program has provided air travel to nonprofit hospitals and medical transportation organizations since 2007. To date, Southwest has donated more than $27.6 million in transportation to more than 69,000 patients and caregivers around the country. This year, Southwest is supporting 79 nonprofit hospitals and medical transportation charities located in 41 cities and 26 states.

Since 2016, Build-A-Bear has donated more than 64,000 teddy bears to organizations across the globe in honor of National Teddy Bear Day. Over the course of its nearly 21-year history, Build-A-Bear and its Guests have donated more than $50 million in funds and furry friends to family-centric charities.

To learn more about the partnership and for shareable assets, visit Southwest.com/buildabear. For downloadable assets, including videos and photos, please visit SWAMedia.com.

About Build-A-Bear

Build-A-Bear® is a global brand kids love and parents trust that seeks to add a little more heart to life. Build-A-Bear Workshop has over 400 stores worldwide where guests can create customizable furry friends, including corporately-managed stores in the United States, Canada, China, Denmark, Ireland, Puerto Rico, and the United Kingdom, and franchise stores in Africa, Asia, Australia, Europe, Mexico and the Middle East. Buildabear.com is the online destination for unique furry-friend gifts, featuring The-Bear-Builder™, a shopping configurator that helps create customized gift options. In 2018, Build-A-Bear was named to the FORTUNE 100 Best Companies to Work For® list for the 10th year in a row.

Southwest Airlines announces new spring routes including new international routes

Southwest Airlines Boeing 737-7H4 WL N947WN (msn 32544) (Shark Week 30th - Bull Shark) IAD (Brian McDonough). Image: 943318.

Southwest Airlines today announced the beginning of its spring 2019 schedule and the addition of new international routes from key U.S. gateway cities. The carrier extended its bookable flight schedule through April 7, 2019:

More International Service

Beginning Saturday, March 9, 2019, the carrier will add new and returning seasonal flights on Saturdays between:

St. Louis and Montego Bay, Jamaica*

St. Louis and Punta Cana, Dominican Republic*

Milwaukee and Cancun

Pittsburgh and Cancun

Raleigh-Durham and Cancun

San Antonio and Cancun

Baltimore/Washington and Cabo San Lucas/Los Cabos

*Subject to government approvals

New Nonstop Routes throughout the United States

Southwest also announced the beginning of new seasonal service on Saturdays effective March 9, 2019, between:

Cleveland and Tampa

Cincinnati and Orlando

On Sunday, March 10, 2019, the carrier will begin weekly service on Sundays between:

Dallas and West Palm Beach, Fla.

Dallas and Harlingen, Tex.

Houston and Lubbock

Top Copyright Photo (all others by Southwest): Southwest Airlines Boeing 737-7H4 WL N947WN (msn 32544) (Shark Week 30th – Bull Shark) IAD (Brian McDonough). Image: 943318.

Southwest aircraft slide show (current livery):

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