Tag Archives: Southwest

Statement by Southwest Airlines regarding Dallas Love Field gate usage

Southwest Airlines (Dallas) has issued this statement concerning the City of Dallas and Delta Air Lines (Atlanta):

Southwest 2014 logo-1

Southwest supports the City’s efforts to manage Love Field in accordance with its obligations under airline leases and the Wright Amendment Reform Act. Southwest disagrees with guidance provided by the U.S. Department of Transportation regarding the use of Love Field gates by non-tenant airlines like Delta. That guidance not only violates Southwest’s legal and contractual rights but would also reduce competition, costing consumers millions of dollars in higher airfares.

Delta’s temporary license to use gate space at Dallas Love Field expires at midnight on July 6, 2015. Beginning August 9, Southwest will fully utilize its 18 Love Field gates by operating 180 flights a day to 50 nonstop destinations resulting in an industry-leading gate utilization of ten flights a day per gate. Southwest will therefore be unable to accommodate any other airline, including Delta, on its gates after that date. Tickets on these Southwest flights have been for sale to our Customers since February or earlier.

The lawsuit filed by the City of Dallas allows the City and Southwest to ask the court to properly interpret applicable law as well as the contractual agreements entered into by the City and Southwest relating to Love Field, which clearly give Southwest the right to expand upon and maximize the usage of its leased gates in the best interest of the citizens of Dallas. Every other air carrier serving North Texas, including Delta, can grow without restriction at DFW Intl. Airport, which Delta currently serves. Southwest is restricted from growing beyond its 18 Love Field gates, which is a small fraction of the total 185 gates in the Dallas Ft. Worth market.

Copyright Photo: Bruce Drum/AirlinersGallery.com. Boeing 737-76N N7705A (msn 32744) prepares to land in Las Vegas.

Southwest Airlines aircraft slide show (current livery): AG Airline Slide Show

Airliners International 2015: Now running through tomorrow at the Delta Flight Museum in Atlanta. For more information: CLICK HERE

Airliners International 2015 logo

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 rebrands with a flashy new look and theme

Heart One. Stephen M. Keller

Southwest Airlines (Dallas) today officially unveiled this new livery, theme and logo in a special ceremony this morning in Dallas despite some images being leaked, probably from where it was painted in Victorville, CA. The first aircraft to be repainted is the pictured Boeing 737-8H4 N8642E (msn 42525) (above) delivered new on August 6, 2014.

Southwest The Heart sets us apart (LRW)

The company issued this statement this morning:

Southwest Airlines introduced a modern new look to its iconic brand today (September 8) at an event dedicated to its Employees. The airline proudly unveiled a new aircraft livery, named Heart One, airport experience, and logo. The new look puts the airline’s Heart on display, showcasing the strength of the nearly 46,000 Employees Companywide—whose dedication can be felt by every Customer each time Southwest Airlines connects them to what’s important in their life.

“Our collective heartbeat is stronger and healthier than ever, and that’s because of the warmth, the compassion, and the smiles of our People,” said Gary Kelly, Southwest Airlines Chairman, President, and Chief Executive Officer. “The Heart emblazoned on our aircraft, and within our new look, symbolizes our commitment that we’ll remain true to our core values as we set our sights on the future.”

It’s a big year for Southwest, as the airline introduces its legendary brand to international destinations; the repeal of the Wright Amendment is within sight; and the integration of AirTran Airways operations is on track to be completed later this year. Southwest continues to evolve, serving more than 90 destinations, and expanding its footprint in big markets like New York City and Washington, D.C.

“With all these exciting changes happening, we thought it was time for a new visual expression of our brand—one that marries our past to our present and sets the course for where we’re headed in the future,” Kelly said.

Southwest 2014 logo

NEW LOOK, SAME GREAT EXPERIENCE

The announcement of Southwest Airlines’ modern new look introduces a striking new livery design, new iconic Southwest logo (above), newly designed inflight materials and magazine, an advertising campaign that celebrates the airline’s unique personality, and a revamped experience both online and at its airport locations, all of which showcase the unique spirit and Heart of the brand, and communicate its focus on Customer care. In addition, the airline will introduce a refresh to its signature “DING!” mnemonic.

To bring this all to life, Southwest collaborated with advertising and branding partners GSD&M, Lippincott, VML, Razorfish and Camelot Communications—each an expert in their own field. The task was given to distill more than 40 years of rich history into one modern, impactful look, representing the exciting future of a one-of-a-kind airline.

“The job wasn’t to change who we are,” said Kevin Krone, Southwest’s Vice President and Chief Marketing Officer. “We already know who we are. The job was to keep the elements of Southwest that our Employees and Customers love, and to make them a bold, modern expression of our future.”

“With so much of Southwest’s focus firm¬ly set on the future, it was a natural time to look at our visual identity,” said Bob Jordan, Southwest Airlines Executive Vice President and Chief Commercial Officer.

“As we developed the identity, it wasn’t just about the new livery or the logo, but about developing the total, integrated brand expression of Southwest,” said Rodney Abbot, Senior Design Partner at Lippincott.

Southwest new heart logo

“The Heart is our identity the same way the Heart of our Southwest Employees enhances the Customer experience, said Krone. “It’s the finishing touch that makes the Southwest brand unique, demonstrating that Southwest cares about each and every Customer. Even on the belly of the plane, the Heart is a symbolic reminder that we put our Hearts into every flight.”

“For more than three decades, GSD&M has partnered with Southwest Airlines, so we certainly understand and believe in the power of Southwest’s Heart,” said Marianne Malina, President of GSD&M. “We were thrilled with the opportunity to partner with an extraordinary and talented team to bring Southwest’s love of People front and center. This work is a celebration of the great brand that Southwest has become and, most importantly, where it’s headed next.”

Southwest Airlines and its partners did comprehensive research and held numerous focus groups with Employees and Customers to determine how best to create the new look. The airline heard that it was important to remain unique and to retain its personality; for these reasons, Southwest continues to use the vibrant color palate and striped tail that has long identified the carrier, while adding a modern touch, proudly displaying the Southwest name on the side of the fuselage and presenting the Heart on the aircraft belly. Southwest has had several different liveries and logos throughout its 43-year history; remaining current and relevant is critical to the sustainability and future growth of the brand.

As a legendary low-fare carrier, Southwest doesn’t make a change this bold without first assessing cost impact. The approach and focus with this launch has been with the intent to remain cost-neutral by using a phased rollout. Aircraft will receive the newly painted livery within the aircraft’s existing repainting schedule, with new aircraft delivered in the new Heart livery. In addition, many of the future airport conversions will be integrated into existing and upcoming airport improvement projects. Because Southwest is taking this cost-conscious approach to the conversion of planes and airports, it might be some time before Customers and Employees see the new design in person.

Heart One. Stephen M. Keller

Copyright Photo: Southwest Airlines. The company again has bold new fuselage titles for good visibility.

Here is the message from Chairman, President and CEO Gary Kelly:

Forty-three years ago, Southwest launched a low-fare revolution that is still alive and well today. Ignited by a Maverick Spirit and a passion for serving others, we set out to do things differently than the other guys. Today, the world is a much different place than it was back in 1971. Our industry landscape is hardly recognizable, and our Customers’ travel habits have evolved. Southwest has evolved too — but we have never stopped smiling.

We’ve been hard at work over the past decade transforming Southwest to be just as relevant and successful for the next four decades. We enhanced our cabin interiors, installing WiFi and offering free live TV onboard (thanks to DISH®!). With the Boeing 737-800 series aircraft, we’re bringing on larger airplanes that are better suited for longer flights. We expanded in big markets like New York City and Washington, D.C. and revamped our Rapid Rewards® Frequent Flyer program. We acquired AirTran Airways, and we’re in the final stages of integrating our two airlines to become one by the end of this year. The AirTran integration set the stage for Southwest to launch international service for the first time in our history, which we did in July. And next month, a federal law (the Wright Amendment) restricting where we can fly domestically from our home airport of Dallas Love Field will be lifted — giving us the freedom to serve more nonstop markets from our hometown.

With all these exciting changes happening, we thought it was time for a new visual expression of our brand — one that marries our past to our present and sets the course for where we’re headed in the future. So this month, we’re introducing a modern, new look. You’ll see it throughout your experience with us. Our new logo showcases a Heart — fitting for a Company whose very core has always been fueled by the heartbeat of its People. Our collective heartbeat is stronger and healthier than ever, and that’s because of the warmth, the compassion, and the smiles of our People. This Heart symbolizes our commitment to you that we’ll remain true to our core as we set our sights on the future.

What started as a revolution has undergone an evolution. But we haven’t changed what we stand for: low fares, a convenient flight schedule, and the friendliest Employees in the world. Our Purpose is to connect you, our valued Customer, to the moments that are most important in your life, through friendly, reliable, and low-cost air travel. That was true in 1971, and it’s just as true today. So, while our look may be new, our DNA is the same — with the big Heart and big smile you have come to LUV. Thanks for coming along for the ride!

All images by Southwest Airlines.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Southwest Airlines Aircraft Slide Show: AG Slide Show

What do you think?

Video: The unveiling of the new brand:

Video: The evolution of the heart logo:

Video: Repainting the first aircraft:

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 completes the installation of Water Vapor Sensing Systems on 87 Boeing 737 aircraft, will fly international routes next year

Southwest Airlines (Dallas) has completed the installation of Water Vapor Sensing Systems (WVSS-II) on 87 Boeing 737 aircraft. The water vapor initiative, a result of a partnership between Aeronautical Radio Incorporated (ARINC), National Oceanic and Atmospheric Administration (NOAA) and SpectraSensors, has the potential to improve weather forecasting by providing real-time and frequent humidity data when aircraft takeoff and land at airports around the country.

“Southwest’s meteorology team has always worked closely with ARINC and NOAA, and the WVSS-II project is symbolic of our strong reliance on each other. We are proud to be the only passenger airline currently participating in the project and look forward to the many ways WVSS-II will impact and improve both weather forecasting and the impact on airline operations,” said Rick Curtis, Chief Meteorologist, Southwest Airlines.

National Weather Service (NWS) forecasters routinely use WVSS-II observations in their day-to-day operations. Monitoring the distribution of moisture in the atmosphere and how the moisture levels change with time play an integral role in forecast preparation. Aviation forecasters rely on WVSS-II data to help determine location and timing of fog, cloud formation, and dissipation, and altitudes of cloud ceilings, all critical to determining safe conditions for aircraft travel.

“Water vapor is the most rapid-changing and under-sampled element in the atmosphere,” said Carl Weiss, an aviation meteorologist for NOAA.  “On the heels of a tumultuous weather year, WVSS-II is part of a larger initiative contributing to Weather Ready Nation, our initiative focused on building community resilience in the face of extreme weather events. WVSS-II data upon takeoffs and landings allow forecasters to monitor and stay on top of how moisture is changing in the atmosphere, specifically in severe weather situations when preparedness is especially important.”

WVSS-II, manufactured by SpectraSensors, Inc., measures water vapor in the atmosphere hundreds of times during an aircraft’s flight. These measurements are automatically transmitted to ARINC’s headquarters in Annapolis, MD, via the ARINC GLOBALink/VHFTM data link service. The moisture data along with other aircraft weather data are then forwarded in near real-time to the U.S. National Weather Service, which uses them to improve the accuracy of its computer-generated weather forecasts and severe weather warnings.

“The WVSS-II observations add a critical new piece of weather data to the forecasting puzzle,” says Jeannine Hendricks, ARINC’s Manager for the WVSS program. “For the first time in aircraft operations, we are collecting water vapor data that measures the humidity in the air. This has the potential to revolutionize weather forecasting—especially when predicting thunderstorms—a significant weather occurrence for aviation.”

While weather balloons, previously the only method for capturing weather data, measure wind, temperature, and humidity data just twice per day at certain locations, the water vapor sensors gather humidity data throughout the day at multiple points across the nation. The improved water vapor data will have a direct benefit in the accuracy of forecasts of precipitation and clouds, which will benefit the aviation community, its customers, and the general public.

Southwest Airlines plans to continue working with ARINC and NOAA in conjunction with the National Weather Service to expand WVSS-II installations on its aircraft fleet.

In other news, Southwest will announce a schedule for international service next year according to CEO Gary Kelly and Reuters. This will be the first international routes for the carrier. Subsidiary AirTran Airways currently flies to Mexico and the Caribbean.

Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 737-8H4 WL N8310C (msn 38807) arrives in Las Vegas.

Southwest Airlines: AG Slide Show

Video:

Southwest and Virgin America interested in buying AA-US slots at New York LaGuardia

Southwest Airlines (Dallas) and Virgin America (San Francisco) are interested in buying the slots at New York (LaGuardia) that American Airlines (Dallas/Fort Worth) and US Airways (Phoenix) have agreed to give up with the DOJ for the merger approval according to Reuters.

Read the full report: CLICK HERE

Copyright Photo: Ken Petersen/AirlinersGallery.com. Southwest Airlines’ Boeing 737-7H4 WL N216WR (msn 32488) with “Free Bags Fly Here” extra markings departs from Raleigh-Durham International Airport (RDU).

Southwest Airlines: AG Slide Show

Virgin America: AG Slide Show

Newsworthy Photo of the Day – May 15, 2013

Southwest Air Lines-SWAL/JTA (Japan Transocean Air) Boeing 737-446 JA8999 (msn 29864) HND (Akira Uekawa). Image: 912016.

Copyright Photo: Akira Uekawa/AirlinersGallery.com.

Hot New Photos: AG Hot New Photos

Southwest Airlines and AirTran Airways connect their networks

Southwest Airlines (Dallas) announced today that it has successfully completed the connection between the Southwest and AirTran Airways networks. Customers are now able to purchase itineraries to the airlines’ combined 97 destinations, including international, in one transaction. The newly connected itineraries are on sale now via all Southwest and AirTran sales channels for service starting on April 14.

Southwest Airlines and AirTran Airways took the first step in connecting their networks on January 26, 2013, by offering a small number of connected itineraries in five markets. On February 25, 2013, the airline launched connected itineraries in 39 cities.

By connecting the Southwest and AirTran networks, Customers may:

  • Add one or more AirTran domestic flight segments to a Southwest itinerary, using Southwest booking channels
  • Book one or more Southwest flight segments connecting to an AirTran itinerary, using AirTran channels
  • Use all Southwest channels to book an AirTran-only domestic itinerary.
  • Add an international AirTran segment to a Southwest itinerary within a single reservation, through a Customer-friendly transfer of the transaction to AirTran channels for booking, purchase, and ticketing by AirTran.
  • Earn currency in either loyalty program no matter which carrier they fly. (The currency a Customer earns is determined by the carrier from which they buy their ticket, even if flying on a shared itinerary.)

As is standard with industry “code share” arrangements, the Marketing Carrier’s (where you buy your ticket) rules and policies apply to reservations and ticketing.  The Operating Carrier’s (which airline operates the flight) procedures apply to boarding, seating, and the onboard experience. Southwest is making one exception: any itinerary with a Southwest segment or that is purchased through a Southwest point-of-sale channel will not have bag fees for the first or second checked bag (weight and size restrictions apply.)

Southwest Airlines announced plans to acquire AirTran Airways on September 27, 2010, an acquisition that significantly expanded Southwest Airlines’ low-fare service to more Customers in more domestic markets, creating hundreds of additional low-fare itineraries for the traveling public.  Since Southwest Airlines closed the deal to purchase AirTran Airways on May 2, 2011, Southwest and AirTran Employees have worked hard to facilitate a thoughtful and smooth integration process while providing the same high level of Customer Service that Customers have come to expect. To date, Southwest Airlines has welcomed 30 percent of AirTran Employees to the Southwest Family, has converted 11 AirTran Airways 737-700 aircraft to the Southwest paint scheme and interior configuration, and has transitioned five AirTran Airways-served cities into Southwest Airlines operations.

The process of a full integration of the AirTran Airways 737 fleet into the Southwest Airlines fleet (i.e. paint scheme and interior configuration) and transition to a single ticketing system is a large and complex process that is expected to be completed by the end of 2014.  Southwest Airlines realized $142 million of net, annualized, pre-tax synergies during 2012, and expects to achieve $400 million in 2013 (excluding acquisition and integration expenses).

Copyright Photo: Michael B. Ing. Southwest Airlines’ Boeing 737-8H4 WL N8309C (msn 36985) completes its final approach into Los Angeles International Airport.

AirTran Airways: AG Slide Show

Southwest Airlines: AG Slide Show

Southwest Airlines achieves its 40th consecutive year of profitability

Southwest Airlines Company (Southwest Airlines and AirTran Airways) (Dallas) today reported its fourth quarter and full year 2012 results.  Fourth quarter 2012 net income was $78 million, or $.11 per diluted share, which included $13 million (net) of favorable special items.  This compared to net income of $152 million, or $.20 per diluted share, in fourth quarter 2011, which included $86 million (net) of favorable special items.  Excluding special items, fourth quarter 2012 net income was $65 million, or $.09 per diluted share, which was comparable to fourth quarter 2011.  This exceeded the First Call consensus estimate of $.08 per diluted share.  Additional information regarding special items is included in this release and in the accompanying reconciliation tables.

For the full year of 2012, net income was $421 million, or $.56 per diluted share, which included $4 million (net) of favorable special items. This compared to $178 million, or $.23 per diluted share, in full year 2011, which included $152 million (net) of unfavorable special items.  Excluding special items, full year 2012 net income was $417 million, or $.56 per diluted share, compared to net income of $330 million, or $.43 per diluted share, for full year 2011.  Operating income for full year 2012 was $623 million, compared to $693 million for full year 2011.  Excluding special items, operating income for full year 2012 was $838 million, which was comparable to full year 2011.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “2012 was a year of tremendous progress.  Our profits (excluding special items) of $417 million grew 26 percent as compared to 2011 and represented our 40th consecutive year of profitability.  Without a doubt, this is a remarkable feat and a record unmatched in the airline industry.  These solid earnings were achieved despite significant efforts and costs related to critical strategic initiatives.  I expect these initiatives to produce substantial returns over the next several years.  For 2012, these initiatives contributed to the 49 percent surge in our cash flow from operations to $2.1 billion. We ended the year with fourth quarter profits (excluding special items) of $65 million, which was in line with our year ago performance.

“I was very pleased with our operational performance for the year and our Customer Service delivery. Both were exceptional, especially considering the amount of work involved with our initiatives.  I am deeply grateful to all of our People for their extraordinary efforts and a truly remarkable year.

“Our fourth quarter 2012 operating revenues were a fourth quarter record $4.2 billion, bringing full year 2012 operating revenues to more than $17 billion.  Our strong fourth quarter 2012 operating revenue performance was driven by record yields, continued high load factors, and an impressive freight revenue performance.  As with the full year profits, these strong revenues were achieved despite the transitional state of the AirTran route network.  While there was much change in 2012, significant optimization efforts are planned in 2013 for the AirTran network.  As we enter 2013, bookings and revenue trends, thus far, suggest a year-over-year improvement in January 2013 passenger unit revenues in the two to three percent range. While the effect of U.S. tax increases on the domestic economy remains uncertain, bookings for the remainder of first quarter, thus far, are strong.

“Our economic fuel costs, including fuel taxes, were $3.32 per gallon for fourth quarter 2012, and $3.28 per gallon for full year 2012, compared to $3.29 per gallon and $3.19 per gallon for the respective year-ago periods.  Based on market prices as of January 18th, our first quarter 2013 economic fuel costs, including fuel taxes, are estimated to be approximately $3.30 per gallon, as compared to $3.44 per gallon for first quarter 2012.  While current fuel price levels are very high, the year-over-year decline estimated for first quarter 2013 economic fuel costs is an encouraging trend.

“As expected, our fourth quarter 2012 unit costs, excluding fuel, profitsharing, and special items, increased 5.8 percent, as compared to fourth quarter 2011.  While we expect a similar trend in first quarter 2013, year-over-year unit cost inflation, excluding fuel, profitsharing, and special items, is expected to significantly ease for full year 2013 as we complete our Evolve interior cabin retrofits and begin to more fully realize benefits from our fleet modernization efforts.

“While we continue to transform our Company with a bold five-year strategic plan that began in 2011, we remain committed to the pillars of our success—outstanding Customer Service; safe, reliable, and efficient operations; and low costs. We are on track with our plan to fully integrate AirTran into Southwest Airlines by the end of 2014.  We realized $142 million of net, annualized, pre-tax synergies during 2012, and we expect to achieve our $400 million target in 2013 (excluding acquisition and integration expenses).  This month, we are on track to begin testing connecting itineraries between the Southwest and AirTran networks in a handful of markets, with significant offerings planned in February and more in March.  Once fully implemented in April, we expect the connected networks to contribute incremental revenue in 2013 and provide significant opportunities to optimize the combined network.  Our fleet modernization initiatives are on schedule with 259 Southwest 737-700 aircraft retrofitted with our new 143-seat Evolve cabin.  We expect to have all 372 of Southwest’s 737-700 aircraft retrofitted with Evolve by June and 78 of our 737-300 aircraft retrofitted by the end of 2013. We currently have 34 737-800s in our fleet with plans to grow to 54 this year and 78 next year.  We have equipped 400 Southwest aircraft with Row 44 WiFi technology, providing our Customers access to satellite-based WiFi and live television.  We intend to significantly grow our inflight entertainment offerings in 2013.  We are thrilled with the Customer feedback and incremental revenue generated from our All-New Rapid Rewards frequent flyer program that was installed in 2011.  Our international reservation system implementation is on track for 2014, and we continue to make great progress on implementing our new revenue management program in 2013.  Also, we’ve announced new 2013 revenue streams: selling open A1 through A15 premium boarding positions and a new service charge for reuse of funds associated with restricted tickets that are not canceled (or changed) prior to departure.  Collectively, we expect our strategic initiatives and new revenue streams to contribute the majority of the planned $1.1 billion year-over-year revenue increase in 2013.  I am enthused about our 2013 plan and believe our transformation efforts will make us better, stronger, and more competitive.

“Our financial position remains strong with $3 billion in cash and short term investments.  We generated $716 million in free cash flow* during 2012, and we expect healthy free cash flow* in 2013.  We remain focused on enhancing Shareholder value through capital efficiency and our targeted 15 percent pretax return on invested capital.

“We believe in our strategic plan.  And, the outstanding efforts, commitment, and dedication of our People exhibited in 2012 gives me confidence in our ability to successfully execute this plan. The year 2012 was a year of dramatic accomplishments that I believe positions us to be stronger than ever.”

Notable 2012 accomplishments for Southwest Airlines include:

  • 40th consecutive year of profitability
  • 83.1 percent Ontime Performance
  • Recognized with numerous awards and recognitions, most notably being named Customer Service Champions by JD Powers, included in the 2012 Customer Service Hall of Fame by MSN Money, and named one of America’s Top 500 Companies by Barrons
  • Received Single Operating Certificate in March 2012; ten months after AirTran acquisition close
  • Launched 737-800 operations in March (34 aircraft currently in service)
  • Converted 259 Southwest 737-700s to new 143-seat Evolve configuration (including progress thus far in 2013)
  • Continued equipping aircraft with satellite-based WiFi technology, reaching the 400thinstallation in January 2013 (including AirTran conversions)
  • Earned flag status and began selling service to Puerto Rico (to be launched April 2013)
  • Launched Southwest service to Atlanta, Akron-Canton, and Dayton
  • Received slots at Ronald Reagan Washington National Airport and began service
  • Launched AirTran service to Austin, Orange County, Mexico City, and Cabo San Lucas
  • Discontinued AirTran service to 14 airports
  • Resolved all seniority list integrations
  • Converted 11 AirTran 737-700s to the Southwest livery with Evolve configuration
  • Converted four AirTran stations to Southwest: Seattle, Dulles, Des Moines, and Key West
  • Announced plans to convert seven more AirTran stations in 2013: Phoenix, Branson, Charlotte, Flint, Portland (Maine), Rochester, and Wichita
  • Converted 26 percent of the AirTran workforce to Southwest
  • Harmonized all Customer policies between Southwest & AirTran
  • Opened new Pilot and Flight Attendant crew bases at Denver International Airport
  • Selected Amadeus for International Reservation system for 2014 implementation
  • Completed 717 sublease/lease deal with Delta
  • Received Houston City Council approval for Hobby international terminal
  • Deferred $1 billion in capital spending
  • Returned $422 million to Shareholders through repurchasing $400 million of common stock (approximately 46 million shares) and distributing $22 million in dividends

Financial Results and Outlook

AirTran Airways, Inc. became a wholly-owned subsidiary of the Company on May 2, 2011. Results discussed in this release and provided in the accompanying unaudited Condensed Consolidated Financial Statements and Comparative Consolidated Operating Statistics include the results of operations and cash flows for AirTran beginning May 2, 2011, including the impact of purchase accounting.  Full year 2011 results do not include AirTran’s results prior to the acquisition date.  However, the Company believes the analysis of specified financial results on a “combined basis” provides more meaningful year-over-year comparability.  Full year 2011 financial information presented on a “combined basis” is the sum of the historical financial results of the Company and AirTran for periods prior to the acquisition date, but includes the impact of purchase accounting beginning May 2, 2011.  Supplemental financial information presented on a “combined basis” and the accompanying reconciliations are included in this release.

The Company’s total operating revenues in fourth quarter 2012 increased 1.6 percent to $4.2 billion, compared to $4.1 billion in fourth quarter 2011.  Operating unit revenues increased 1.9 percent from fourth quarter 2011. Based on current bookings and revenue trends, the Company expects a solid year-over-year increase in its first quarter 2013 unit revenues.

Total fourth quarter 2012 operating expenses were $4.1 billion, compared to $4.0 billion in fourth quarter 2011.  Excluding special items in both periods, fourth quarter 2012 operating expenses increased 2.4 percent from fourth quarter 2011.

Fourth quarter 2012 economic fuel costs, including fuel taxes, were $3.32 per gallon, including $.09 per gallon in unfavorable cash settlements for fuel derivative contracts, compared to $3.29 per gallon in fourth quarter 2011, including $.12 per gallon in unfavorable cash settlements for fuel derivative contracts.  Based on market prices as of January 18, 2013, the Company expects first quarter 2013 economic fuel costs, including fuel taxes, to be approximately $3.30 per gallon, including $.05 per gallon in unfavorable cash settlements for fuel derivative contracts.  First quarter 2013 premium costs related to fuel derivative contracts, recorded in Other (gains) losses, are currently estimated to be approximately $5 million, compared to premium costs of $6 million in first quarter 2012.  As of January 18, 2013, the fair market value of the Company’s hedge portfolio through 2017 was a net asset of approximately $216 million, compared to a net asset of approximately $220 million at December 31, 2012.  Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Fourth quarter 2012 profitsharing expense was $19 million, which was comparable to fourth quarter 2011.  Excluding fuel, profitsharing, and special items in both periods, fourth quarter 2012 unit costs increased 5.8 percent from fourth quarter 2011.  Based on current cost trends, the Company expects a similar year-over-year increase in its first quarter 2013 unit costs, excluding fuel, profitsharing and special items in both periods.

Operating income for fourth quarter 2012 was $91 million, compared to $147 million in fourth quarter 2011.  Excluding special items in both periods, operating income was $136 million for fourth quarter 2012, compared to $167 million in fourth quarter 2011.  The Company incurred $14 million in special charges (before taxes) during fourth quarter 2012 associated with the acquisition and integration of AirTran.

Other income for fourth quarter 2012 was $34 million, compared to $108 million in fourth quarter 2011.  This $74 million decrease primarily resulted from $62 million in gains recognized in fourth quarter 2012, compared to $153 million in fourth quarter 2011.  In both periods, these gains primarily resulted from unrealized mark to market gains/losses associated with a portion of the Company’s fuel hedging portfolio, which are special items.  Excluding these special items, other losses were $3 million in fourth quarter 2012, compared to $15 million in fourth quarter 2011, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts.  Net interest expense declined to $28 million in fourth quarter 2012, compared to $45 million in fourth quarter 2011, primarily as a result of the Company’s repayment of its $400 million notes in December 2011 and the redemption of its $385 million notes in March 2012.

Total operating revenues for full year 2012 increased 9.1 percent to $17.1 billion, while total operating expenses increased 10.0 percent to $16.5 billion, resulting in operating income of $623 million, compared to $693 million for full year 2011.  For full year 2012, special charges (before taxes) associated with the acquisition and integration of AirTran were $183 million, bringing cumulative costs incurred to $324 million (before profitsharing and taxes).  The Company expects total acquisition and integration costs will be no more than $550 million.  Excluding special items, operating income was $838 million for full year 2012, compared to $839 million for full year 2011.  Excluding special items and compared to combined results for the same period in 2011, total operating revenues for full year 2012 increased 3.0 percent, while total operating expenses increased 3.1 percent, resulting in a 0.5 percent increase in operating income for full year 2012.

The Company’s return on invested capital (before taxes and excluding special items) was approximately 7 percent for the year ended December 31, 2012.  Additional information regarding pretax return on invested capital is included in the accompanying reconciliation tables.

Net cash provided by operations for full year 2012 was $2.1 billion, and capital expenditures were $1.3 billion.  As a result, the Company generated $716 million in free cash flow* in 2012.  During 2012, the Company paid $22 million in dividends, which was a 57 percent increase over the year ago period.  The Company also repurchased approximately 46 million shares of common stock for approximately $400 million.  The Company repaid $578 million in debt and capital lease obligations during 2012, and intends to repay approximately $205 million in debt and capital lease obligations in 2013, including approximately $70 million in first quarter 2013.  As of January 23rd, the Company had approximately $3 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $800 million.

Southwest Airlines Fourth Quarter 2012 Awards and Recognitions

  • Recognized as one of the 2012 Green Rankings Top 500 US Companies by Newsweek
  • Named to G.I. Job’s 2013 Top 100 Military Friendly Employers
  • Ranked first in America’s Happiest Airlines for Holiday Travel by Forbes for the third consecutive year
  • Recognized with the Employees Choice Awards Best Place to Work 2013 by Glassdoor.com
  • Named one of the Five Most Likeable Companies of 2012 by Likeable Media
  • Named one of the National Conference on Citizenship’s The Civic 50 for use of time, talent, and resources in civic engagement

Copyright Photo: Brian McDonough. Boeing 737-8H4 WL N8313F (msn 38810) prepares to touch down at Baltimore/Washington. The airline currently operates 34 737-800s with plans to grow to the 737-800 fleet to 54 this year and 78 next year.

Southwest Airlines: AG Slide Show

AirTran Airways: AG Slide Show

AirTran Airways to fly Denver-Los Cabos starting on March 10

Southwest Airlines (Dallas) and its wholly owned subsidiary, AirTran Airways, have announced new international flights between Denver International Airport (DEN) and Los Cabos International Airport (SJD) in Baja California, Mexico.

AirTran’s daily service on the new route begins on March 10, 2013.

AirTran Airways also currently serves SJD Los Cabos International Airport with daily service to/from Orange County (increasing to twice-daily as of June 2, 2013) and has flights between other destinations in the US and both Cancun and Mexico City.

Southwest Airlines began service to Denver on January 3, 2006, with 13 daily departures to three destinations.  The airline currently operates 163 daily flights to 54 destinations from Denver.  Southwest recently demonstrated its LUV for the state of Colorado by dedicating Colorado One, a specialty aircraft painted with the colors of the Colorado state flag (see below).

Top Copyright Photo: Michael B. Ing. Boeing 737-7BD N290AT (msn 33925) of AirTran Airways completes its final approach into Los Angeles.

AirTran Airways: AG Slide Show

Southwest Airlines: AG Slide Show

Bottom Copyright Photo (click on the photos for the larger view): Mark Durbin. Colorado One in the form of Boeing 737-7H4 N230WN (msn 34592), taxies at San Francisco.