From the Wall Street Journal
Southwest Airlines Beats Earnings Expectations
The carrier says the government shutdown has had a negative sales impact of $10 million to $15 million thus far in January.
By
Kimberly Chin
Jan. 24, 2019 7:46 a.m. ET
SWA beat analysts’ earnings expectations in the latest quarter, as passenger revenue increased.
The largest carrier of U.S. domestic passengers said profit for the quarter was $654 million, or $1.17 a share, compared with $1.75 billion, or $2.94 a share a year earlier. Analysts were expecting a per-share profit of $1.08.
Unit revenue—a key metric of the amount taken in for each passenger flown a mile—rose by 1.8% from a year ago. Its operating revenue increased by 8.5% to $5.7 billion. Analysts surveyed by Refinitiv expected $5.67 billion.
The higher passenger yield offset a 1.5 percentage point decline in its load factor.
Southwest said the partial government shutdown is estimated to have had a negative sales impact of $10 million to $15 million thus far in January.
Based on that trend and assuming no further significant effect on booking from the shutdown, revenue per available seat mile is expected to jump 4% to 5% in the first quarter, the company said Thursday.
“Based on current revenue trends, our cost outlook, and energy futures, we are currently expecting a strong first quarter 2019 financial performance,” Chief Executive Gary Kelly said in prepared remarks.
The company said that passenger demand was healthy and close-in bookings and corporate travel remain strong.
For the period ended Dec. 31, the Dallas-based carrier said its unit costs rose 1.5%. Southwest said fuel costs were higher than a year ago at $2.25 a gallon, from $2.16 a gallon.
Southwest forecast unit costs, excluding fuel and oil expenses, will climb 6% in the first quarter and 3% to 3.5% in 2019. Yet it expects fuel costs to moderate in the next quarter.
Shares of Southwest, which had fallen about 22% in the past 12 months, rose 1% in premarket trading.