Low-cost airline's earnings dip 15%

THE BALTIMORE SUN

High fuel costs, intense competition and a glut of flights put a damper on Southwest Airlines Co.'s earnings in the fourth quarter of last year, but the Dallas-based, low-cost leader still reported a profit yesterday of $56 million.

That was down about 15 percent from $66 million in the corresponding quarter of 2003. The drop pushed down earnings per diluted share from 8 cents in the fourth quarter of 2003 to 7 cents in the fourth quarter of 2004.

In the most recent quarter, revenue passenger miles, which measures seats sold, increased 12.6 percent from the fourth quarter of 2003, and available seat miles, which counts seats for sale, increased 10.5 percent. That meant airplanes were about 65 percent full, up 1.2 percentage points from the previous year.

Overall costs in the latest quarter rose 9.6 percent to $1.54 billion, including a 29 percent increase in spending for fuel. That was about half the 64 percent rise in fuel costs for delivery in New York harbor because the carrier has purchased hedges, or financial instruments used to help flatten price spikes. Hedges saved about $174 million in fuel expense in the quarter, Southwest said.

For all last year, Southwest, the dominant carrier at Baltimore-Washington International Airport, reported profit of $313 million, or 38 cents a diluted share, compared with profit of $442 million, or 54 cents a diluted share, in 2003.

The airline is one of the few profitable American airlines, and officials said yesterday that Southwest should continue to make money this year with the addition of 29 airplanes, one yet-to-be named city to its routes and an expanded schedule at Chicago Midway Airport, where it has taken over the gates of ATA Airlines.

Northwest Airlines Corp., which had its worst performance ever last year, reported a fourth-quarter loss yesterday of $412 million, or $4.84 a share, compared with a profit of $363 million, or $3.60 per share, a year earlier.

Revenue rose 6.4 percent, to $2.75 billion.

For all of 2004, Northwest lost $848 million on revenue of $11.28 billion.

AMR Corp.'s American Airlines, the world's largest carrier, said its quarterly loss widened to $387 million, or $2.40 a share, on revenue of $4.54 billion in the fourth quarter, compared with a loss of $111 million or 70 cents per share a year earlier.

Excluding one-time gains, mostly from selling its interest in online travel service Orbitz, the airline would have lost $2.94 per share - less than the $3.18-per-share loss that analysts had predicted. For all of 2004, AMR lost $761 million on revenue of $18.65 billion.

The Associated Press and Bloomberg News contributed to this article.

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