Category Archives: Southwest Airlines

Southwest Airlines launches service to Turks and Caicos Islands

Southwest Airlines  Boeing 737-8H4 SSWL N8684F (msn 36653) FLL (Bruce Drum). Image: 104504.

Southwest Airlines on November 5, 2017 began operating new international service daily from Ft. Lauderdale-Hollywood International Airport (FLL) to Providenciales International Airport (PLS) in the Turks and Caicos Islands, the carrier’s 11th country served.

In addition, Southwest® initiated new service between its South Florida gateway at FLL and both San Jose, Costa Rica (SJO), and Punta Cana, Dominican Republic (PUJ), giving Customers nonstop access from Fort Lauderdale/Hollywood to 10 destinations in Latin Americaand the Caribbean.

 

Southwest recently extended its bookable flight schedule through early August 2018 bringing new, international service on Saturdays next summer between Houston and Grand Cayman. In addition, service between Cancun and both Pittsburgh and Raleigh-Durham will operate nonstop on Saturdays beginning June 9, 2018, subject to governmental approvals. The summer 2018 flight schedule is Southwest’s largest-ever for Cancun with nonstop service from 16 gateway airports in the U.S. peaking at 27 departures to Cancun on Saturdays.

Southwest also increased summer season 2018 service to Puerto Rico with daily flights between San Juan and Chicago Midway, which had operated only on weekends in Summer 2017, and augmented daily seasonal service between San Juan and Houston Hobby, with a second flight on Saturdays and Sundays beginning June 9, 2018.

Copyright Photo: Southwest Airlines Boeing 737-8H4 SSWL N8684F (msn 36653) FLL (Bruce Drum). Image: 104504.

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Southwest announces its summer 2018 schedule with expansion at Oakland and San Antonio, drops Flint

Delivered on September 14, 2017, in service on October 1, 2017

Southwest Airlines has published its flight schedule through August 6, 2018. The schedule includes new options for California Customers who use Oakland International Airport, and Texas travelers, as well as new gateways to Cancun.

Investment in the Bay Area

Beginning July 15, 2018, the carrier will offer daily nonstop service between:

Oakland and Indianapolis
Oakland and Minneapolis
Oakland and Orlando1
1Route is currently available on Saturdays through July 14.

Alamo City Additions

For the first time, beginning on July 8, 2018, the carrier will offer nonstop service daily between:

San Antonio and Oakland
San Antonio and Ft. Lauderdale/Hollywood

Also from San Antonio, Southwest will resume its seasonal daily service to and from Cancun on June 7, 2018.

Service Adjustments in Michigan

The carrier has made the difficult decision to exit Flint, Mich. (FNT), with the last day of service on June 6, 2018. There will be no Customer impact with today’s decision as tickets won’t be available for sale past the last day of service. However, Southwest remains committed to Michigan with a wide portfolio of destinations available from Detroit and Grand Rapids. Southwest’s 14 FNT Employees will be offered positions elsewhere within the Company.

International Service Grows

Going for Grand in Houston

Southwest announced today that it’s adding seasonal weekly service on Saturdays beginning June 9, 2018, between Houston and one of the carriers’ newest destinations, Grand Cayman (subject to government approvals).

On Saturdays in June, Southwest will offer 18 flights between Houston and 10 international destinations.

Cancun Continues Growing

Thanks to a growing demand for nonstop routes to Cancun, Southwest will add two new international gateways to its domestic route map.

Beginning Saturday, June 9, 2018, the carrier will offer seasonal service on Saturdays between:

Pittsburgh and Cancun*
Raleigh-Durham and Cancun*
*Subject to requiste government approvals

In June, Southwest will offer 27 departures to and from Cancun on Saturdays to 16 cities across the United States, its largest-ever schedule for Cancun.

More Flights to The Bahamas

Also beginning Sunday, June 10, 2018, the carrier will add service between Baltimore/Washington and Nassau, The Bahamas, complementing its Saturday service and daily service between Ft. Lauderdale and Nassau.

New and Resuming Seasonal Service

Beginning June 7, 2018, the carrier will resume daily service in the following seasonal markets:

Denver and Charleston, S.C.
Chicago and San Juan, Puerto Rico
Omaha and Orlando

Beginning June 9, 2018, the carrier will offer new seasonal service on Saturdays between:

Boise and Dallas
Denver and Panama City, Fla.
Tulsa and Orlando

Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N8711Q (msn 36979) LAS (Rainer Bexten). Image: 939513.

Southwest reports a third quarter net profit

Southwest Airlines Boeing 737-8 MAX 8 N8714Q (msn 36934) LAX (Michael B. Ing). Image: 939561.

Southwest Airlines Company on October 26, 2017 reported its third quarter 2017 results:

  • Net income of $503 million, diluted earnings per share of $.84, operating income of $834 million, and operating margin1 of 15.8 percent
  • Excluding special items2, net income of $528 million, diluted earnings per share of $.88, operating income of $871 million, and operating margin3 of 16.5 percent
  • Third quarter operating cash flow of $996 million and third quarter free cash flow2 of $358 million
  • Returned $375 million to Shareholders through a combination of dividends and share repurchases
  • Return on invested capital (ROIC)2 for 12 months ended September 30, 2017, of 26.8 percent

Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, “We are very pleased to report another quarter of strong profits and margins, particularly considering the impact of the unprecedented natural disasters. As a result of Hurricanes Harvey and Irma and the earthquakes, we canceled 5,000 flights which reduced revenues by approximately $100 million in third quarter 2017. Our People’s efforts to provide humanitarian flights, supplies, and financial assistance to Coworkers, Customers, and the communities impacted were truly heroic. Our hearts continue to go out to those impacted. During the quarter, our Employees also managed the retirement of the remaining Boeing 737-300 (Classic) fleet and simultaneous introduction of the Boeing 737 MAX 8 into our fleet. With the launch of the MAX, we were excited to announce our intention to serve Hawaii, which is another exciting milestone for Southwest. I am grateful to our Employees for these significant accomplishments and their extraordinary efforts during these operational challenges.”

Revenue Results and Outlook

The Company’s third quarter 2017 total operating revenues increased 2.6 percent, year-over-year, to $5.3 billion, driven largely by third quarter record passenger revenues of $4.7 billion despite an approximate $100 million reduction as a result of the natural disasters. Third quarter 2017 passenger revenue yield decreased 0.9 percent, year-over-year, due to the competitive yield environment. Third quarter 2017 operating unit revenues (RASM) decreased 0.5 percent, year-over-year. Third quarter 2017 unit revenue results included headwinds of less than a point from the Company’s new reservation system that is not expected to continue in fourth quarter 2017. The Company continues to expect the benefits from the new reservation system capabilities to produce incremental improvements in pre-tax results of approximately $200 million in 2018. Thus far in fourth quarter, overall revenue trends remain stable, and the Company is encouraged by the rebound in passenger booking trends in Houston and Florida. While the revenue yield environment remains competitive, passenger revenue yields thus far in October, on a year-over-year basis, have improved sequentially from August and September year-over-year trends, and travel demand remains solid. Based on these trends and current bookings, the Company expects fourth quarter 2017 RASM to increase in the range of up slightly to up 1.5 percent, as compared with fourth quarter 2016.

Cost Performance and Outlook

Third quarter 2017 total operating expenses decreased 0.2 percent to $4.4 billion, or 3.2 percent on a unit basis, as compared with third quarter 2016. As expected, the Company recorded aircraft grounding and lease termination charges of $83 million (before profitsharing and taxes) as a special item associated with the Classic fleet retirements during third quarter 2017. Third quarter 2016 included $356 million of accrued ratification bonuses (before profitsharing and taxes) as a special item associated with tentative collective-bargaining agreements reached with multiple unionized workgroups, as well as lease termination charges totaling $18 million as a special item. Excluding special items in both periods, total third quarter 2017 operating expenses increased 5.6 percent to $4.4 billion, or 2.5 percent on a unit basis, year-over-year.

Third quarter 2017 economic fuel costs2 were $2.00 per gallon, including $.31 per gallon in unfavorable cash settlements from fuel derivative contracts, compared with $2.02 per gallon in third quarter 2016, which included $.56 per gallon in unfavorable cash settlements from fuel derivative contracts. Based on the Company’s existing fuel derivative contracts and market prices as of October 20, 2017, fourth quarter 2017 economic fuel costs are estimated to be approximately $2.10 per gallon4. As of October 20, 2017, the fair market value of the Company’s fuel derivative contracts settling during fourth quarter 2017 was a net liability of approximately $129 million, and the fair market value of the hedge portfolio settling in 2018 and beyond was a net asset of approximately $126 million. 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 2017 operating expenses increased 7.1 percent, as compared with third quarter 2016. Third quarter 2017 profitsharing expense was $127 million, as compared with $101 million for third quarter 2016. Excluding fuel and oil expense, special items, and profitsharing expense, third quarter 2017 operating expenses increased 6.5 percent, or 3.3 percent on a unit basis, year-over-year. The primary drivers of this year-over-year unit cost increase in third quarter 2017 were the impacts from the natural disasters and the significant snap-up in wage rates due to Flight Attendant and Pilot amended collective-bargaining agreements that became effective in fourth quarter 2016, partially offset by benefits from the Company’s fleet modernization efforts.

Based on current cost trends, the Company estimates fourth quarter 2017 unit costs, excluding fuel and oil expense, special items, and profitsharing expense, to be in the range of flat to up 1.5 percent, year-over-year5. This continued sequential improvement in unit cost trends is aided by the retirement of the Classic fleet, the lapse of the step-up in wage rates from labor collective-bargaining agreements ratified in fourth quarter 2016, and the wind-down of temporary costs associated with the May 2017 implementation of the new reservation system. The Company’s year-over-year estimate of fourth quarter 2017 unit costs, excluding fuel and oil expense, special items, and profitsharing expense, is higher than previously expected due largely to a shift in advertising spend from third quarter 2017 to fourth quarter 2017 and incremental costs associated with technology investments including the Company’s Extended Operations (ETOPS) authorization in preparation for Hawaii service.

Third Quarter Results

Third quarter 2017 operating income was $834 million, compared with $695 million in third quarter 2016. Excluding special items, third quarter 2017 operating income was $871 million, compared with $972 million in third quarter 2016.

Other expenses in third quarter 2017 were $43 million, compared with $77 million in third quarter 2016. The $34 million difference resulted primarily from $39 million in other losses recognized in third quarter 2017, compared with $64 million in third quarter 2016. In both periods, these losses included ineffectiveness and unrealized mark-to-market amounts associated with a portion of the Company’s fuel hedging portfolio, which are special items. Excluding these special items, other losses were $35 million in third quarter 2017, compared with $33 million in third quarter 2016, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Fourth quarter 2017 premium costs related to fuel derivative contracts are currently estimated to be approximately $34 million, compared with $36 million in fourth quarter 2016. Net interest expense in third quarter 2017 was $4 million, compared with $13 million in third quarter 2016.

Third quarter 2017 net income was $503 million, or $.84 per diluted share, compared with third quarter 2016 net income of $388 million, or $.62 per diluted share. Excluding special items, third quarter 2017 net income was $528 million, or $.88 per diluted share, compared with third quarter 2016 net income of $582 million, or $.93 per diluted share, and compared with First Call third quarter 2017 consensus estimate of $.87 per diluted share.

Liquidity and Capital Deployment

As of September 30, 2017, the Company had approximately $3.0 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion. During third quarter, Standard & Poor’s upgraded the Company’s investment grade credit ratings to “BBB+” from “BBB.” Net cash provided by operations during third quarter 2017 was $996 million, capital expenditures were $638 million, and free cash flow was $358 million2. The Company repaid $106 million in debt and capital lease obligations during third quarter 2017, and expects to repay approximately $57 million in debt and capital lease obligations during fourth quarter 2017.

During third quarter 2017, the Company returned $375 million to its Shareholders through the payment of $75 million in dividends and the repurchase of $300 million in common stock. The Company repurchased $300 million in common stock pursuant to an accelerated share repurchase (ASR) program launched during the quarter and received approximately 4.1 million shares, representing an estimated 75 percent of the shares expected to be repurchased under that ASR program. During third quarter 2017, the Company also received approximately 1.6 million shares, which remained pursuant to a $400 millionsecond quarter 2017 ASR program, bringing the total shares repurchased under that ASR program to approximately 6.6 million. The Company has $1.7 billionremaining under its May 2017 share repurchase authorization.

For the nine months ended September 30, 2017, net cash provided by operations was approximately $3.4 billion, capital expenditures were approximately $1.6 billion, and free cash flow was a strong $1.8 billion2. This enabled the Company to return approximately $1.5 billion to Shareholders through the payment of $274 million in dividends and the repurchase of approximately $1.25 billion in common stock.

Fleet and Capacity

The Company ended third quarter 2017 with 687 aircraft in its fleet. This reflects the third quarter 2017 delivery of six new Boeing 737-800s, six pre-owned Boeing 737-700s, and nine new Boeing 737 MAX 8 aircraft, as well as the retirement of the Boeing 737-300 Classic fleet, which was completed on September 29, 2017. The Company continues to expect to end 2017 with 707 aircraft and 2018 with 750 aircraft in its fleet. Additional information regarding the Company’s aircraft delivery schedule is included in the accompanying tables. The Company currently expects its fourth quarter 2017 available seat miles to increase in the one to two percent range, compared with the same year-ago period.

During third quarter 2017, the Company continued its investment in California by adding nearly 20 new nonstop routes, increasing frequency to 27 existing routes, and opening new international gateways, in each case beginning in 2018. The Company also recently announced plans to begin selling tickets in 2018 for service to Hawaii and announced its intention to launch an application process for Federal Aviation Administration authorization for ETOPS. The Company continues to expect its 2018 available seat mile year-over-year growth to be less than 5.7 percent, with first half 2018 year-over-year growth in the range of three to four percent.

737 Delivery Schedule

As of September 30, 2017

The Boeing Company

-800 Firm
Orders

MAX 7
Firm
Orders

MAX 8
Firm
Orders

MAX 8
Options

Additional

 -700s

Total

2017

39

14

18

71

(b)

2018

26

13

4

43

2019

15

5

20

2020

14

8

22

2021

1

13

20

34

2022

15

21

36

2023

34

23

57

2024

41

23

64

2025

40

36

76

2026

36

36

2027

23

23

65

30

170

(a)

195

22

482

(a) The Company has flexibility to substitute 737 MAX 7 in lieu of 737 MAX 8 aircraft beginning in 2019.

(b) Includes 28 737-800s, 14 737-700s, and 9 737 MAX 8s delivered as of September 30, 2017.

The Company’s GAAP results in the applicable periods include other charges or benefits that are also deemed “special items,” that the Company believes make its results difficult to compare to prior periods, anticipated future periods, or industry trends. Financial measures identified as non-GAAP (or as excluding special items) have been adjusted to exclude special items. Special items include:

  1. Union contract bonuses recorded for certain workgroups. As the bonuses would only be paid at ratification of the associated tentative agreement and would not represent an ongoing expense to the Company, management believes its results for the associated periods are more usefully compared if the impacts of ratification bonus amounts are excluded from results. Generally, union contract agreements cover a specified three- to five- year period, although such contracts officially never expire, and the agreed upon terms remain in place until a revised agreement is reached, which can be several years following the amendable date;
  2. Expenses associated with the Company’s acquisition and integration of AirTran Holdings, LLC, the parent company of AirTran Airways, Inc. (“AirTran”). Such expenses were primarily incurred during the acquisition and integration period of the two companies from 2011 through 2015 as a result of the Company’s acquisition of AirTran, which closed on May 2, 2011. The exclusion of these expenses provides investors with a more applicable basis with which to compare results in future periods now that the integration process has been completed;
  3. A noncash impairment charge related to leased slots at Newark Liberty International Airport as a result of the Federal Aviation Administration announcement in April 2016 that this airport was being changed to a Level 2 schedule-facilitated airport from its previous designation as Level 3 (a “slot” is the right of an air carrier, pursuant to regulations of the Federal Aviation Administration, to operate a takeoff or landing at a specific time at certain airports);
  4. Lease termination costs recorded as a result of the Company acquiring 13 of its Boeing 737-300 aircraft off operating leases as part of the Company’s strategic effort to remove its Classic aircraft from operations on or before September 29, 2017, in the most economically advantageous manner possible. The Company had not budgeted for these early lease termination costs, as they were subject to negotiations being concluded with the third party lessors. The Company recorded the fair value of the aircraft acquired off operating leases, as well as any associated remaining obligations to the balance sheet as debt; and
  5. An aircraft grounding charge recorded in third quarter 2017, as a result of the Company grounding its remaining Boeing 737-300 aircraft on September 29, 2017. The loss was a result of the remaining lease payments due and certain lease return requirements that may have to be performed on these leased aircraft prior to their return to the lessors as of the cease-use date. The Company had not budgeted for the lease return requirements, as they are subject to negotiation with third party lessors.

Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N8714Q (msn 36934) LAX (Michael B. Ing). Image: 939561.

 

Southwest Airlines introduces a new “Disney Pixar Coco” logo jet

Coco plane. Southwest Airlines. Stephen M. Keller

Southwest Airlines is celebrating Disney∙Pixar’s all-new, big-screen adventure “Coco” in high-flying style this fall with a comprehensive program that includes a Boeing 737-700 aircraft emblazoned with the vibrant “Coco” logo and artwork inspired by the film.

The aircraft will fly among the carrier’s nearly 100 destinations throughout the United States, Mexico, Central America, and Caribbean through the end of 2017.  As the largest domestic carrier in the U.S. serving more than 115 million passengers yearly*, Southwest Airlines connects People every day to what is important in their lives.  With Disney∙Pixar’s “Coco,” Southwest connects its Customers to an all-new story that’s both exciting and inspiring. The film opens in U.S. theaters on Nov. 22, 2017.

*Based on latest U.S. Dept of Transportation data of O&D passengers.

Southwest's 2017 "Disney Pixar Coco" promotional livery

Above Copyright Photo:  Southwest Airlines Boeing 737-7L9 WL N7816B (msn 28009) (Disney Pixar Coco) SAN (James Helbock). Image: 939639.

“‘Coco’ is about a boy with big dreams and a strong connection to his family,” says Director Lee Unkrich. “These themes really lend themselves to teaming up with a company like Southwest. And after working for nearly six years to bring this story to life, we were all so excited to see ‘Coco’ on the side of an airplane.”

Customers are encouraged to spot the “Coco” plane and share their photos using #CocoAndSouthwest.  Southwest is also giving families the opportunity to enter for a chance to send their family on an adventure of a lifetime by entering the Southwest Family Flyaway sweepstakes between October 1-25, 2017, to win roundtrip air travel for four to Los Angeles; four tickets to the Disney∙Pixar “Coco” U.S. premiere and party on November 8, 2017; a two-night stay at the Hollywood Roosevelt Hotel in Hollywood; and a $1,000 VISA® gift card for travel expenses.  To view the full rules and to enter, visit familyflyaway.com.

Additionally, Southwest is sharing the adventures of “Coco” with Customers onboard flights beginning Nov. 1, with the launch of the Disney∙Pixar “Coco” OnDemand Channel, featuring complimentary movie clips and trailers to get everyone excited about “Coco” in 3D this Thanksgiving. Be sure to tune-in ahead of the film’s Nov. 22 theatrical debut.

Later this fall, the music of “Coco” will come to life onboard the “Coco” aircraft with a Live at 35® inflight concert performance by Anthony Gonzalez, who voices Miguel in the movie. Customers will experience the sounds and culture up-close and in-the-moment as Anthony sings a song from the upcoming film accompanied by a guitarist.

Photos: Southwest Airlines.

Video:

Southwest introduces the new Boeing 737-8 MAX 8 today

Southwest Airlines Boeing 737-8 MAX 8 N8706W (msn 42559) LAX (Derin Allard). Image: 939350.

Southwest Airlines (Dallas) on October 1, 2017 added a new aircraft type to its fleet. The carrier put nine copies of the new Boeing 737 MAX 8 into revenue service today. The airline becomes the first U.S. carrier to operate the new type. Southwest was the launch customer.

The first revenue flight retraced the original route of Dallas (Love) – Houston (Hobby) – San Antonio – Dallas (Love).

The delayed inaugural flight was predicated on the retirement of the Boeing 737-300 fleet.

Southwest is planning to have 14 MAX 8s in service by the end of the year.

 

The company is committed to 170 MAX 8s and 30 MAX 7s.

The pictured N8706W is one of two MAX 8s that operated into Los Angeles today.

Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N8706W (msn 42559) LAX (Derin Allard). Image: 939350.

Southwest says farewell to the Boeing 737-300

Southwest Airlines Boeing 737-3H4 N632SW (msn 27707) FLL (Bruce Drum). Image: 101996.

Southwest Airlines made this short statement on social media:

Tonight (September 29, 2017), we sent our last The Boeing Company 737-300 aircraft out in style. Flight WN68 flew from HOU-DAL in its farewell appearance in our fleet. We say thank you for 32 years and good night to the Boeing 737-300.

The last 737-300 revenue flight was operated with the pictured Boeing 737-3H4 N632SW (msn 27707).

As a result of the 737-300, today, October 1, 2017, Southwest also introduces the Boeing 737 MAX 8 on revenue flights.

Copyright Photo: Southwest Airlines Boeing 737-3H4 N632SW (msn 27707) FLL (Bruce Drum). Image: 101996.