Fri, Jul 20, 2007
Carrier Says Fuel Costs Have Cut Into Its Profitability
Southwest Airlines Co. released its second quarter financial
report Wednesday noting a drop in net income compared to the same
period last year.
The Dallas-based carrier blames ever-rising fuel costs,
according to Newsday. It reports its quarterly earnings fell 16.5
percent, to $278 million, or 36 cents a share, compared with net
income of the second quarter of 2006 of $333 million, or 40 cents a
share.
"The anticipated decline in our year-over-year second quarter
earnings performance reflects a continued rise in fuel costs and
difficult unit revenue comparisons. As we recently outlined,
specific initiatives are well underway to adapt to higher jet fuel
cost levels. Through these initiatives, we believe that we can
maintain our low fare, low cost leadership while achieving
substantially enhanced incremental revenues over the next several
years," said Southwest Chief Executive Officer Gary C. Kelly.
The carrier said it was paying $1.62 a gallon for fuel, a 14.1
percent increase over last year and saw gains of $173 million from
its fuel-hedging program.
SWA said second quarter revenues were $2.6 billion, a 5.5
percent increase over the prior year's quarter.
Shares of Southwest closed Tuesday at $15.59, a decrease of four
cents.
"Although we face earnings challenges, primarily due to
escalating fuel costs, we are confident in our future and the
Employees of Southwest Airlines," said Kelly.
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