Southwest Airlines reports record fourth quarter and annual profit

Eleanor Steed
By Eleanor Steed January 29, 2018 14:30

Southwest Airlines reports record fourth quarter and annual profit

Southwest Airlines’ fourth quarter 2017 total operating revenues reached $5.3 billion, driven largely by record fourth quarter passenger revenues of $4.7 billion. This is compared with fourth quarter 2016, where total operating revenues increased 3.9 percent on a 2.0 percent increase in available seat miles, resulting in a 1.9 percent increase in operating unit revenues (RASM). Strong passenger demand resulted in a fourth quarter record 85.0 percent load factor, while fourth quarter passenger revenue yield decreased 0.1 percent, year-over-year. Passenger bookings and revenues for first quarter 2018, thus far, are solid, says the airline. Based on these trends and the current outlook, the company expects first quarter 2018 RASM to increase in the one to two percent range, as compared with first quarter 2017.

Annual 2017 total operating revenues increased 3.7 percent, year-over-year, to a record $ 21.2 billion due to strong passenger demand for low fares, resulting in a 0.1 percent increase in RASM.

Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, “Our strong fourth quarter earnings performance capped another year of extraordinary achievements, including 45 straight years of profitability… “Our strong profits, cash flow, and financial position enabled us to deploy capital wisely and sustain high returns on invested capital. We made significant progress modernizing our fleet, investing in technology and facilities, and returning value in excess of our free cash flow 1 to Shareholders. We celebrated several notable milestones during 2017, including the implementation of our new reservation system; the retirement of our Boeing 737-300 Classic fleet; the launch of the new Boeing 737 MAX 8; the launch of service to Cincinnati, Grand Cayman, and Turks & Caicos; and the announcement of our commitment to serve Hawaii. Our Employees delivered another outstanding year of operational Reliability and Hospitality, including the best baggage delivery rates in our history. These achievements are significant, especially considering the backdrop of unprecedented natural disasters and the competitive industry environment. As ever, the Warrior Spirits and fortitude of our People resulted in an outstanding overall 2017 performance, which earned them $543 million in profit sharing during 2017.”

Kelly also welcomed the tax reform legislation passed on December 22, 2017, which will help to reduce the airline’s 2017 deferred tax liability by $1.4 billion.

Eleanor Steed
By Eleanor Steed January 29, 2018 14:30