Tuesday November 25, 2014
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Southwest Airlines predicts modest increase in key revenue measure during first quarter

DALLAS - Southwest Airlines Co. says March bookings are "solid" and the company expects a key revenue measure to rise modestly in the first quarter.

Chief financial officer Tammy Romo said Monday that passenger revenue for every seat flown one mile would rise by a low-single-digit percentage in both February and the entire first quarter compared with the same periods in 2012.

That statistic is watched closely in the airline business. It rises when airlines raise prices or fill more of their seats. At Southwest, it rose 2.6 per cent in 2012 after climbing 4.9 per cent in 2011 and 15.5 per cent in 2010.

Romo said at a JPMorgan Chase conference in New York that January and February results met Southwest's expectations. She cautioned, however, that the nation's fourth-biggest airline was watching to see if travel demand fell due to the economy, automatic government spending cuts, or higher taxes.

In December, Southwest officials told investors that they expected to double the return on invested capital from 7 per cent to 15 per cent by the end of 2013. On Monday, Romo said, "Our first quarter is tracking in line with what we had laid out in our plan." But that could change if the economy weakens, she said.

Romo also said the airline was looking to boost revenue from fees, although she gave few details. Southwest said in December it would begin charging a fee for passengers with the cheapest fares, called Wanna Get Away, if they fail to cancel a reservation and will boost fees on early check-in and oversized bags.

Separately, the company announced Monday that Southwest would begin flying four new nonstop routes once daily beginning later this year: Nashville-Pittsburgh, Atlanta-San Diego, Des Moines-Las Vegas, and Jacksonville, Fla.-Chicago. It will also convert service between Fort Lauderdale, Fla., and San Juan, Puerto Rico, to Southwest from the company's AirTran Airways subsidiary.

Shares of Dallas-based Southwest rose 22 cents, or 1.9 per cent, to $12.04 in afternoon trading after rising as high as $12.07, its highest level since May 2011.



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