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AirTran, Southwest Profits Soar, AW Marginal Prof.

Fri Jan 23, 2004 11:58 am

Southwest earnings jump 57% in fourth quarter
Dateline: Friday January 23, 2004

Southwest Airlines earned $66 million in the fourth quarter ended Dec. 31, up 57.1% from $42 million earned in the year-ago period.
The company also marked its 31st consecutive year of profitability, earning $442 million in 2003, up 83.4% over $241 million in 2002.
Fourth-quarter operating revenues rose 8.3% to $1.52 billion while operating expenses grew 7.1% to $1.41 billion. Operating income climbed 26.1% to $111 million from $88 million. At the unit level, yield was up 2.6% to 12.57 cents on a 5.3% rise in RPMs. With capacity increasing only 4%, load factor advanced 0.8 point, pushing RASM up 4% to 8.29 cents. Cost per ASM rose 2.9% to 7.69 cents, or 2.8% to 6.51 cents excluding fuel, a performance that was "better than we feared it might be," according to Executive VP and CFO Gary Kelly.
Annual operating revenues climbed 7.5% to $5.74 billion against a 6.8% rise in expenses to $5.45 billion. The result was that operating income surged 15.8% to $483 million last year from $417 million in 2002.

Despite the strong performance, Chairman and CEO James Parker warned in a statement that the carrier is "experiencing some cost pressures…and [is] aggressively implementing various measures to improve our productivity." Southwest expects to save $40 million annually by eliminating travel agency commissions, an action that took effect Dec. 15. It also announced plans to close three of nine reservation centers.
Although the airline will incur restructuring charges estimated in the $20 million range in the current quarter, Parker said, "We expect ongoing annual operating cost savings to exceed that amount." Kelly said expectations are that 800 of 1,100 affected employees will accept transfers, with the remainder leaving the airline. Cost pressures should ease in the second half of the year.
Southwest recently exercised options to acquire five more 737-700s next year, bringing firm 2005 deliveries to 28 plus six options. It will add 47 aircraft this year. After subtracting planned 737-200 retirements, the net increase is 29 aircraft, which translates into a 7%-8% capacity rise in 2004 and 11% in 2005.

AirTran profits soar as growth continues
Dateline: Friday January 23, 2004

It was another quarter of substantial growth for AirTran Airways and the airline has no plans of slowing down in 2004.

The low-cost carrier posted net income of $21.7 million in the fourth quarter ended Dec. 31, or $16 million excluding special items. This compares to a net income of $7.5 million in the year-ago period.

The 21% capacity growth in the quarter contributed to a 19.3% increase in operating revenues to $238.8 million. Operating expenses climbed 17.3% to $218 million, resulting in operating income of $20.8 million, a 45.1% jump compared to operating income of $14.4 million in the 2002 period.

CASM in the quarter dropped 3.1% to 8.12 cents. On a fuel-neutral basis, CASM declined 4.2% to 8.03 cents. The company said the reduction in unit cost reflects the replacement of older DC-9s with new 717s as well as "productivity improvements" among flight and line personnel owing to improved scheduling efficiencies. Yield per RPM fell 6.6% to 12.35 cents on a 27% increase in traffic while RASM decreased 1.6% to 8.62 cents on a 3.6-point gain in load factor to 69.8%.

For the full year ended Dec. 31, AirTran reported net income of $100.5 million, a significant improvement from net income of $10.7 million for 2002. Operating revenue jumped 25.2% to $918 million and operating expenses rose 18.3% to $813.7 million. As a result, operating income more than doubled to $86.3 million from $30.6 million in 2002.

The airline will take delivery of 14 aircraft this year--six 717s and eight 737s--and anticipates full-year capacity growth of 18%. With the 737s coming onboard, it expects some "fluctuations" in CASM on a quarterly basis. "However, we project that our operating CASM for the full year will decrease approximately 1%-2%," a company official said.

America West expects profits to continue in 2004
Dateline: Friday January 23, 2004

Three months ago, America West Airlines Chairman and CEO Doug Parker said he expected the company to achieve considerable improvement in the fourth quarter but still record a loss.

Instead, AWA reported net income of $6.8 million in the three months ended Dec. 31, a complete turnaround compared to a $52 million net loss in the year-ago period. "Thankfully, I was wrong," Parker explained. Excluding special items, which included a charge related to a new labor agreement with its pilots, the company posted net income of $10.6 million in the quarter.

Operating revenues rose 7.8% to $563.2 million and operating expenses fell 1.7% to $550.6 million. As a result, operating income totaled $12.6 million as compared to an operating loss of $37.9 million last year.

Unit costs were down 2.5% to 7.78 cents in the quarter. Excluding special items and fuel, unit costs plunged 8.8% to 6.20 cents. A company official said the improvement in CASM was driven by a 7.4% boost in stage length, increased aircraft utilization and cost-saving initiatives announced at the end of March 2003.

Yield grew 1% to 9.88 cents during the quarter. The improvement in yield coupled with a 2.3-point increase in load factor produced a 4.3% gain in passenger RASM to 7.46 cents. CFO Scott Kirby said the RASM improvement was owing partly to the airline's "business-friendly fare structure" that continues to generate significant market share gains. Business RASM contribution grew 14% year-over-year and represented 41% of revenues in the quarter, according to Kirby.

For the year ended Dec. 31, America West reported net income of $57.4 million compared to a net loss of $387.9 million in 2002. Operating revenues rose 10.1% to $2.25 billion while operating expenses edged up 0.7% to $2.22 billion, resulting in an operating income of $32.9 million. This compares to a $160.1 million operating loss in 2002.

Although Parker said the 2004 first quarter is likely to be close to breakeven, he expects the company to be "comfortably profitable" for the full year. As previously announced, AWA expects to grow capacity 8%-10%, primarily through increased aircraft utilization, a change in fleet mix from 737-200s to A320s and greater stage length.

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Now you're really flying
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RE: AirTran, Southwest Profits Soar, AW Marginal Prof.

Fri Jan 23, 2004 12:05 pm

Well I'm glad to see that they are making money, but again comes the old statement....."if you want to be become a Millionaire investing in airlines, start with a Billion dollars". AWA and AT don't even offer dividends, and SW offers like .004c per share.!! Big deal........ at price per earnings my GE stock Smokes SW...!!
"It's not the size of the dog in the fight, but the size of the fight in the dog"
Posts: 1926
Joined: Mon Jul 15, 2002 9:55 am

RE: AirTran, Southwest Profits Soar, AW Marginal Prof.

Fri Jan 23, 2004 12:13 pm

GE also smokes SW for money and size. I don't think that's a very good comparision.  Wink/being sarcastic

Back on topic, great news for all these airlines, but even better for AirTran and America West. (I'm not saying it's bad news for Southwest, but it's not a suprise 31 years running and all  Big thumbs up)
Posts: 2077
Joined: Sat Sep 13, 2003 11:32 am

RE: AirTran, Southwest Profits Soar, AW Marginal Prof.

Sat Jan 24, 2004 1:31 am

Great news for all airlines!

Of course I'm very happy about HP! The same day they announced we made a profit, they announced that our profit sharing checks will be mailed out early next week! Oh boy! Everyone at work was very excited (of course it's only for non-union employees). Mine's already spent  Smile
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