Some notes from the earnings call:
earnings were $97 million / $0.13 a share excluding specials, which ahead of market projections
o $81mil net in unfavorable items including 717 agreement writedown, fuel hedge settlements and AirTran integration.
o Gary Kelly said not satisfied with level of earnings which was below internal targets but always pleased to have a profit.
o Expect unit revenues excluding fuel to remain flat for 2013. Expect to pare $100mil for corporate overhead next year.
o Boosted shareholder dividend and also doing share repurchase. $325mil so far allocated.
o Reduced debt by $517mil this year.
o Goal is to produce 15% return on capital by end of 2013.
o Hedge portfolio 15% for 2013 so far.
o $3.2 billion cash and investment on hand.
TRAFFIC / NETWORK
revenue was solid, but definite signs of demand weakness, especially in September. Unit basis, down about 2% to 3%.
o Closer connection of the WN
networks scheduled for early 2013
o Scheduling is becoming more focused with careful optimization of each aircraft's routing to maximize revenues
o Implemented 5 systemwide fare increases which held.
o Business mix of passenger approx 35-40%. Seeing increase in Business Select revenues which helps offset otherwise weak yield environment. Also 20% of tickets are full fare.
o Building beyond Dallas Wright Amendment destination sales. Revenues up 18% yoy.
o Will end year with flat ASMs, Winter will be down slightly however. 2013 might see a little growth but with flat fleet.
o Delta 717 deal closed in the quarter -
o 9 AirTran 737s converted into SWA
o 737 Evolve cabin retofits continue. Have 147 aircraft with higher 143 seat count.
o Pleased with 737-800s. 24 in service.
o Seeing a maintenance bubble. Seat retrofits, and -700 engine overhauls creating cost and time pressures. Should flatten by mid 2013.
o Will roll out a new revenue management system in 2013.
o New Rapid Rewards performing very well. Just in partner sales seeing $200mil in added revenues.
o Expect AirTran synergies to generate $400mil net benefit in 2013. $110mil in cost savings, and about $290mil on revenue side.
o New Amadeus res system with international capability coming in 2014.
[Edited 2012-10-18 15:57:36]