Southwest Airlines Reports First Quarter Net Loss

Southwest Airlines has reported a first quarter 2009 net loss of $91 million, compared to net income of $34 million for first quarter 2008. First quarter 2009 results included special charges totaling $71 million. Excluding special items the first quarter 2009 net loss was $20 million compared to net income of $43 million in first quarter 2008.

Total operating revenues for first quarter 2009 decreased 6.8 percent to $2.4 billion, compared to $2.5 billion for first quarter 2008. Total first quarter 2009 operating expenses were $2.4 billion, in line with first quarter 2008, Southwest said.

"Our first quarter 2009 financial results are disappointing, but not surprising given the current economic environment,” said Gary C. Kelly, CEO. "We face the toughest revenue environment in our history. A rapid weakening in passenger demand during first quarter, particularly among business travelers, led to our first quarter net loss. Although competitively strong and financially resilient, we are not immune to the challenges the worldwide recession is having on air travel. Our revenue trends continue to outperform our U.S. competitors. These revenue results demonstrate the strength of our Low Fare brand, the benefits of our aggressive flight schedule optimization, and the effectiveness of our Marketing and Revenue Management efforts.”

Southwest said its recent promotions and discounting activities have been successful in stimulating traffic. “Our first quarter 2009 load factor of 69.9 percent was a record first quarter performance, despite the impact of Easter shifting to April this year versus March last year," Kelly said. "We continue to enhance our strong brand, customer experience, and traffic through our no hidden fees campaign. However, yields were down 2.8 percent from a year ago, resulting in a unit revenue decline of 2.9 percent.”

Kelly said that Southwest will continue its focus on maximizing the efficiency and profitability of each published flight schedule and has the ability to grow in new and developing markets. This includes Denver, Minneapolis-St. Paul, New York LaGuardia, and Boston Logan.

Southwest previously announced its service from New York LaGuardia airport to begin with five flights to Chicago Midway and three flights to Baltimore/Washington on June 28, 2009; and its Boston Logan service to begin August 16 with five flights to both Chicago Midway and Baltimore/Washington.

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