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Southwest has biggest market value of U.S. rivals


DALLAS - Southwest Airlines Co., not so little anymore, has the highest market value of any U.S. airline.

Southwest Chairman Herbert D. Kelleher used Southwest's annual meeting last week to do a little bragging about a decade in which Southwest's growth and profit roared ahead almost unabated. Southwest is the largest airline operating at Baltimore-Washington International Airport.

Kelleher said Southwest shares were worth about $757 million at the end of the 1980s. Today, the market value of its shares totals more than $10.6 billion, he told shareholders.

To illustrate further, Kelleher said a person owning 1,000 shares of Southwest stock at the end of 1989 would have owned $24,000 in shares.

By the end of 1999, the holdings would have increased to 15,187 shares because of stock splits, and the value would have jumped to $245,000, he said.

"The decade of the 1990s was a superb decade for the shareholders and employees of Southwest Airlines," Kelleher said.

Southwest's shares are worth more than $10.5 billion. Among other carriers, the closest in value is Delta Air Lines Inc., worth $6.9 billion.

Fort Worth, Texas-based AMR Corp., parent of American Airlines Inc., has a market value of $5.15 billion. Its value dropped recently after it spun off the 82 percent it owned of Sabre Group Holdings Inc.

UAL Corp., parent of United Airlines Inc., ranks fourth at $3.13 billion. United is the largest airline in the world on the basis of traffic and capacity.

Kelleher told shareholders the future was looking pretty good, too.

Because of much higher prices for jet fuel, Southwest's earnings of $95.6 million in the first quarter were flat compared with the first period in 1999, Kelleher said."Was this a bad omen? No, it was a good omen," said Kelleher, also Southwest's president and chief executive officer.

Excluding American Airlines, whose first-quarter 1999 earnings were low because of a February 1999 pilot sick-out, the eight other major carriers on average had profits 68 percent lower than in the first quarter 1999, Kelleher said. "'Flat' is obviously far superior to 'minus 68 percent,'" he said.

To cushion the impact of higher jet fuel prices, Southwest has hedged 87 percent of its second-quarter fuel purchases and all of its second half purchases at prices far below current market levels, he said.

In response to questions about his health, Kelleher said his treatment for prostate cancer last fall was "very successful" and that he is doing well.

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