Kelly Sticks To Four Percent Forecast

In an economic climate which has the legacy US airlines discussing how much capacity they'll cut this year, the CEO of Southwest Airlines is still predicting four percent growth overall for 2008.

The Associated Press reports Gary Kelly qualified his optimism in a talk to investors in New York Wednesday by saying Southwest's growth will be modest through next year, and any expansion could be put on hold if oil prices and the economy remain challenging.

Southwest famously adopted a policy years ago of hedging fuel costs by purchasing Jet-A years in advance, but the purpose, after all, is to allow the company to remain profitable, not to simply accrue smaller losses.

"We know like everyone knows that we're going to have to move fares along gradually and continuously to be able to overcome these dramatically higher fuel costs," Kelly said. "If we have to slow our growth to zero next year, we're obviously prepared to do that."

Kelly says expansion opportunities will be carefully chosen, and will more likely take the form of increased service in markets such as Denver, where other carriers are cutting back, than acquisitions of competitors.

For what it's worth, Southwest's stock closed up another 4.7 percent Thursday, at $14.80... a sign investors believe they can take Kelly's statements to the bank.

FMI: www.southwest.com