Tag Archives: Penguin One

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

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

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

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

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

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

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

Read the petition: CLICK HERE

SeaWorld logo

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

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

Southwest Airlines: AG Slide Show

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

Video: Blackfish movie trailer:

Southwest reports record second quarter net income of $485 million

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

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

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

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

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

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

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

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

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

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

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

Financial Results and Outlook

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

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

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

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

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

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

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

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

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

Balance Sheet and Cash Flows

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

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

Fleet

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

Boeing 737 NG Delivery Schedule:

Southwest 737NG Delivery Schedule 7.2014 (LRW)

Notes:

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

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

Southwest Airlines: AG Slide Show

AirTran Airways: AG Slide Show

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

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

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

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

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

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

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

Southwest Airlines: AG Slide Show

Southwest Airlines introduces Penguin One

Southwest Airlines (Dallas) and SeaWorld Parks & Entertainment™ (SEAS) celebrated 25 years of partnership today with the unveiling of the airline’s newest specialty aircraft, Penguin One— Boeing 737-7H4 N280WN (msn 32533) co-branded with images of one of SeaWorld®’s iconic animals.

Southwest and SeaWorld revealed the aircraft at a ceremony this morning at Orlando International Airport (MCO) with real penguins, Southwest and SeaWorld Employees, community members, and executives including Southwest Airlines Chairman, President, and CEO Gary Kelly and SeaWorld Parks & Entertainment President and CEO Jim Atchison. The plane, filled with Southwest and SeaWorld employees, also made stops in two other SeaWorld cities, San Antonio and San Diego.

The partnership between the two companies dates back to 1988, which began when SeaWorld opened in San Antonio. Southwest and SeaWorld launched their partnership in a high-flying way—with the introduction of a new Boeing 737, Shamu® One!

The featured penguin species on the aircraft is a gentoo, one of the species found at SeaWorld Orlando’s new Antarctica: Empire of the Penguin™. The attraction includes a first-of-its-kind family ride that transports guests into the penguins’ icy world.

This morning’s ceremony celebrated the introduction of Penguin One in a spirited way as attendees waved black-and-white pom poms, enjoyed black-and-white-themed snacks, and cheered as executives christened the aircraft while SeaWorld‘s Pete and Penny Penguin looked on.

Penguin One joins 12 other 737s in the Southwest fleet that carry a unique paint scheme: Shamu One, Shamu Two, Arizona One, California One, Colorado One, Florida One, Illinois One, Lone Star One (Texas), Maryland One, Nevada One, New Mexico Oneand Triple Crown One (unveiled in 1997).

From the “Nuts About Southwest” blog (all photos by Southwest Airlines):

We kicked off Penguin One’s debut at Orlando International Airport (MCO) with more than 500 local Employees and community leaders, along with Southwest Airlines Chairman, President, and CEO Gary Kelly, and SeaWorld Parks & Entertainment CEO, Jim Atchison (shown below). Also on hand to meet the newest member of the family were famous SeaWorld mascots Pete and Penny Penguin, Penguin One’s real life counterparts (We think we got their approval!).

Penguin One

Penguin One

We had a lot of fun with our “Tuxedo” theme, as attendees waved black and white pom-poms, snacked on black and white themed snacks, and cheered as Kelly, Atchison, Pete and Penny, and the SeaWorld Aviculturists officially christened the aircraft. The celebration may have started in Orlando, but it didn’t end there! A team made up of Southwest Airlines and SeaWorld Employees boarded Penguin One and took the party to two other SeaWorld cities—San Antonio and San Diego—to celebrate with local Employees.

Specialty Planes

Introducing Penguin One, The Newest Addition To Our SeaWorld Specialty Fleet

In 1988 when SeaWorld® opened in San Antonio, two great companies in the tourism world launched a new partnership in a high-flying way with the introduction of three co-branded 737 jets; Shamu One, born May 23, 1988; Shamu Two, born May 30, 1990; and Shamu Three, born September 7, 1990. Upon the retirement of Shamu One, we’re excited to welcome Penguin One to our fun fleet of SeaWorld specialty planes!

Penguin One Fun Facts:

  • Born: June 20, 2013
  • Hometown: Spokane, WA
  • Resides in: 97 destinations in 41 states, the District of Columbia, the Commonwealth of Puerto Rico, and six near-international countries
  • Length: 110 feet, 4 inches
  • Weight: 84,100 lbs.
  • Parents: Southwest Airlines Employees
  • Seats: 143
  • Hobbies include: Flying high, keeping Southwest Airlines’ Customers comfortable, and displaying a strong relationship between Southwest Airlines and SeaWorld Parks & Entertainment
  • The largest penguin on Penguin One is over 26 feet long

Painting Process Facts:

  • Penguin One is painted in seven different colors
  • Nine day paint operation (24 hours around the clock) compared to the three day turnaround for our standard paint scheme
  • 35 people over three shifts
  • 100 gallons of paint applied to the fuselage
  • The Gentoo penguins on Penguin One vary in length from 12 feet to more than 26 feet, about five to ten times the size of the average Gentoo penguin! The aircraft is also covered with a clear coat of paint to protect the design and keep Penguin One looking great for years to come.

Meet the Rest of Our Specialty Fleet

  • Shamu Two – May 30, 1990
  • Shamu Three – Sept. 7, 1990
  • Lone Star One – Nov. 7, 1990
  • Arizona One – May 23, 1994
  • Triple Crown – June 9, 1997
  • California One – Sept. 19, 1998
  • Nevada One – June 12, 1999
  • New Mexico One – Sept. 18, 2000
  • Maryland One – June 14, 2005
  • Illinois One – April 14, 2008
  • Florida One – April 23, 2010
  • Colorado One – August 22, 2012
Video and Images: Southwest Airlines.

Southwest Airlines (see all of the logojets): AG Slide Show