Air- Southwest Airlines posts a third quarter profit amid labor questions – The Denver Post

Posted: October 26, 2012 in Uncategorized

October 19, 2012

Southwest Airlines on Thursday delivered its third-quarter earnings report on the heels of a soft September and amid speculation of future labor cuts for the carrier.

Southwest’s 2012 third-quarter net income was $16 million. Excluding special items, the profit would have been $97 million. In 2011, the airline posted a net loss of $140 million for its third quarter. However, excluding special items, it posted a net profit of $122 million that quarter.

The low-cost airline is hoping to trim more than $100 million in costs in 2013.

For years, Southwest has been the industry torchbearer for price setting and alternative business practices. The airline has spent the past several years building new revenue streams, but its 2013 plan is focusing heavily on cost-cutting tactics.

“I don’t think we are telling you our outlook for 2013 is pessimistic,” said Gary Kelly, Southwest’s chief executive. “I think what we are telling you is that we have a plan for 2013. We are going to try to create a little insurance for ourselves.”

The airline is seeking to operate with a leaner labor force by the end of next year. Kelly insisted that this will not involve furloughs or layoffs, an action that the company has never taken in its 41-year history.

“We do have some concerns,” Kelly said. “And I don’t think we want to just do business as usual.”

Southwest experienced a 13 percent increase in expenses for the first nine months of 2012 and a smaller increase in sales at 12 percent.

Specific cost concerns include airport rentals, landing fees and some significant construction projects in Las Vegas and Sacramento, Calif. Kelly said the political landscape was causing business uncertainty.

Southwest executives are citing the drop in business travelers for September’s poorer performance.

The AirTran acquisition has complicated Southwest’s 2012 bookkeeping.

“Within it, we are going through quite a bit of churn,” Kelly said. “Since we’ve owned AirTran, we’ve made significant improvements in their revenues.”

With gradual turnovers of the AirTran fleet to Southwest-branded properties, the goal is to have the merger completed by the end of next year.

Kelly dismissed speculation that growing competition in certain target markets is inhibiting Southwest — with Frontier Airlines’ growing traction in Denver specifically named — saying most of its challenges are internal.

http://www.denverpost.com/business/ci_21805534/southwest-airlines-posts-third-quarter-profit-amid-labor

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