Tag Archives: AirTran

AirTran Airways operates its last flight, now fully integrated into Southwest Airlines

AirTran 717-200 N717JL taxies into the gate at TPA (Southwest)(LR)

AirTran Airways (Orlando), as planned ended its operations last night (December 28) on its original Atlanta-Tampa route. Special flight FL 1 arrived at the gate at Tampa International Airport (TPA) at 2339 (11:39) EST. As a result, the AirTran brand was retired and the flight marked the full integration of AirTran into Southwest Airlines (Dallas). The last flight was operated with Boeing 717-2BD B717JL (msn 55042).

Read about the history of AirTran Airways: CLICK HERE

Southwest Airlines issued this statement:

Southwest Airlines embarked on a new era on December 28 as it celebrated the last AirTran Airways revenue flight. At 10:25pm EST, AirTran Airways Flight 1 departed Hartsfield-Jackson Atlanta International Airport to Tampa Bay International Airport.

“With this special flight, we are celebrating history and setting our sights on a bright future for all of Southwest Airlines,” said Bob Jordan, Southwest Airlines’ Chief Commercial Officer and AirTran Airways President, who was on the flight to Tampa. “The work of so many People culminates in this moment as we salute the enormous accomplishments of AirTran and Southwest. For our Customers and Employees, we now move forward with one airline, one Customer Experience, one flight schedule, one Rapid Rewards frequent flyer program, and one award-winning Brand.”

More than 400 AirTran and Southwest Employees and special guests gathered in Atlanta Sunday evening to commemorate the milestone. AirTran Flight 1 retraced a route that is a nod to AirTran’s first commercial flight in October 1993. Flight 1’s flight crew consisted of longtime AirTran Employees, including the airline’s Chief Pilot, Floy Ponder, a 19-year veteran of AirTran Airways. Each of the flight’s 117 passengers, consisting of many former AirTran Employees, retirees, special guests, and aviation enthusiasts received a special keepsake celebrating the historic flight.

“As we’ve grown in both the domestic and international markets, I can’t help but think about all the doors the AirTran acquisition has opened for Southwest Airlines,” said Gary Kelly, Southwest Airlines Chairman, President & CEO, who was in Atlanta for the send-off. “The most important things—which cannot be measured and are irreplaceable—are the great People of AirTran who have worked hard to achieve this milestone, and are all soon to be part of the Southwest Airlines family.”

The acquisition of AirTran was a unique opportunity to extend the Southwest network into key markets it didn’t yet serve, such as Atlanta and the greater Washington, D.C., area, via Ronald Reagan National Airport. The integration gives Southwest the opportunity to serve Customers from 93 airports in the U.S. and near-international destinations, providing Customers more low-fare destinations as it expands the well-known “Southwest Effect” to hundreds of additional low-fare itineraries for the traveling public.

Southwest Airlines acquired AirTran Airways in 2011.

Photo: Southwest Airlines. Boeing 717-2BD N717JL taxies into the gate at TPA ending the history of the airline.

AirTran Airways aircraft slide show: AG Slide Show

Video: Southwest Airlines. The last AirTran flight from Atlanta to Tampa:

Video:

<p><a href=”http://vimeo.com/115567085″>The last departure of AirTran Airways</a> from <a href=”http://vimeo.com/user19954503″>Bruce Drum</a> on <a href=”https://vimeo.com”>Vimeo</a&gt;.</p>

 

Southwest Airlines reports a record third quarter net profit

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

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

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

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

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

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

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

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

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

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

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

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

Financial Results and Outlook

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

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

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

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

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

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

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

Balance Sheet and Cash Flows

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

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

Fleet

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

Boeing 737 Delivery Schedule:

Southwest 737 Delivery Schedule 9.30.14

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

Southwest Airlines Aircraft Slide Show: AG Slide Show

AirTran Airways Aircraft Slide Show: AG Slide Show

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

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

New, nonstop service for Dallas Love Field:

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

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

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

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

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

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

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

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

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

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

AirTran Airways: AG Slide Show

Southwest Airlines: AG Slide Show

 

 

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

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

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

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

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

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

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

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

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

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

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

Notable 2013 accomplishments for Southwest Airlines include:

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

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

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

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

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

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

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

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

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

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

Southwest Airlines: AG Slide Show

Southwest reports a record 3Q net profit of $241 million

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

Financial Results

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: AG Slide Show

AirTran adds more flights on the Baltimore/Washington-Fort Lauderdale/Hollywood route

AirTran Airways (subsidiary of Southwest Airlines) (Dallas) has announced more options for Baltimore Customers looking to get to Florida, AirTran Airways will add as many as four daily nonstop flights between Baltimore/Washington and Ft. Lauderdale/Hollywood beginning on September 6, 2012, through the end of its published schedule on February 13, 2013. The new flights will add to AirTran’s existing three daily roundtrip flights between the markets.

With the September flight schedule, Southwest Airlines will operate three daily nonstop flights between Baltimore/Washington and Ft. Lauderdale/Hollywood for a combined total of up to ten daily roundtrip BWI-FLL flights between the carriers.

Southwest Airlines began service to Baltimore/Washington on Sept. 15, 1993, with ten daily nonstop departures to two cites. Since then, Southwest has grown its operation to more than 170 daily nonstop departures to nearly 50 cities. Southwest has nearly 3,000 Employees at BWI, and has a plane dedicated to the state, Maryland One.

Top Copyright Photo: Bruce Drum. Boeing 737-7BD N281AT taxies to the runway at Fort Lauderdale/Hollywood.

AirTran Airways: 

Southwest Airlines: 

Bottom Copyright Photo: Bruce Drum. Maryland One arrives at Las Vegas.

Southwest Airlines and AirTran Airways aircraft maintenance technicians ratify Seniority Integration Agreement

Southwest Airlines (Dallas) announced the Aircraft Maintenance Technicians (AMT) from Southwest Airlines, represented by the Aircraft Mechanics Fraternal Association (AMFA), and AirTran Airways (Dallas), represented by the International Brotherhood of Teamsters (IBT) Local 528, voted to ratify their Seniority Integration Agreement. This agreement integrates the two groups’ seniority lists. Southwest Airlines finalized closing of the acquisition of AirTran Holdings, Inc., on May 2, 2011.

AMFA represents approximately 1,750 Southwest Airlines Aircraft Maintenance Technicians, and the IBT represents close to 500 Mechanics from AirTran Airways.

Today’s vote by the AMTs means they now join the Pilots, Flight Attendants, Flight Instructors, Dispatchers, and Ramp, Operations, Provisioning and Freight Agents as having successfully completed the Seniority Integration negotiation process. Work groups still in seniority integration negotiations include Customer Service Agents and Customer Support and Service Employees and Materials Specialists.

This moves the merger one step closer.

Top Copyright Photo: Bruce Drum.

Southwest Airlines: 

AirTran Airways: 

Bottom Copyright Photo: Jay Selman. The AirTran Boeing 717s will not be painted in Southwest’s livery.