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WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 12:54 pm
by av8orwalk
http://www.usatoday.com/story/travel...rlines-ekes-out-q3-profit/1640775/

Small profit of $16 million. Compared to a loss of $140 million during the same quarter last year.

Cheers
Drew MCO

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 1:02 pm
by catdaddy63

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 1:05 pm
by DFWHeavy
I expected a higher profit out of WN in the 3rd quarter, but hey, a profit is a profit and I'm sure they will take it over being in the red.

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 1:13 pm
by flyiguy
Quoting DFWHeavy (Reply 2):
I expected a higher profit out of WN in the 3rd quarter, but hey, a profit is a profit and I'm sure they will take it over being in the red.


Compared to the other Dallas based carrier I would say yeah  

FLY

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 5:00 pm
by DFWHeavy
I'm also a little surprised WN doesn't have a little more cash on hand. I figured it would be in the $4-5 bill range.

Oh well, good for them. Glad they turned another profit.

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 6:15 pm
by GentFromAlaska
Courtesy Fox Business News interviewed Gary Kelly today (Thursday) here's the podcast http://video.foxbusiness.com/v/19103...earnings/?playlist_id=933116624001

[Edited 2012-10-18 11:16:37]

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 9:16 pm
by SJUSXM
After special items, the profit was just below $100 million. Interestingly enough, less than AMR's 3Q. Still a profit is a profit.

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 10:52 pm
by LAXintl
Some notes from the earnings call:


FINANCIAL

o Q3 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

o Q3 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 and FL 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.

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.


OTHER

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]

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 11:00 pm
by airliner371
An update of WIFi and TV came out in the updated fact sheet. 330 aircraft are WiFi enabled and live television via the WiFi product is now available on all WiFi-enabled aircraft.

Also in the updated fact sheet, St. Louis is now the 10th largest airport in the SWA system though when FL/WN combine numbers MCO surpasses it again.

http://swamedia.com/channels/Corpora...t-Sheet/pages/corporate-fact-sheet

[Edited 2012-10-18 16:03:01]

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 11:05 pm
by BD338
Quoting LAXintl (Reply 7):
Expect AirTran synergies to generate $400mil net benefit in 2013. $110mil in cost savings, and about $290mil on revenue side.

They better do as all the special items, and I suspect a large number are merger related, are taking operating profits from $208M to a final bottom line of $16M for the Q. Need to see some real financial benefits sometime soon.

Quoting LAXintl (Reply 7):
Will end year with flat ASMs, Winter will be down slightly however. 2013 might see a little growth but with flat fleet.

Slight uptick driven by the completion of the Evolve changes with the extra 6 seats?

Quoting LAXintl (Reply 7):
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.

How does 20% full fare mix stand up against a DL or UA?

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 11:47 pm
by FL787
Quoting LAXintl (Reply 7):
Also 20% of tickets are full fare.
Quoting BD338 (Reply 9):
How does 20% full fare mix stand up against a DL or UA?

CFO Romo said 20% walk-up, not necesarily full fare though I'm sure most were.

RE: WN Reports Q3 Profit - $16M

Posted: Thu Oct 18, 2012 11:53 pm
by LAXintl
Walk Up = Full Fare

Here is the call transcript with actual words:

Glenn D. Engel - BofA Merrill Lynch, Research Division
And finally, you -- I was a little confused. The full-fare mix, I think, last year it was 17% in the third quarter. And I think it was 17% in this second -- the quarter that just ended. What number did you say it was in the third quarter of this year?

Tammy Romo - Chief Financial Officer and Senior Vice President of Finance
Glenn, I'm going to point you back to -- I think what I mentioned earlier was the 20% close-in passengers I mentioned during my remarks, with more welcome [ph] discounting needed to stimulate traffic in this tough yield environment. The full-fare percentages we provided historically really just aren't that meaningful, so we -- so I'll point you more to just kind of walk-up mix, which is 20%, and that this right in line with last year.

RE: WN Reports Q3 Profit - $16M

Posted: Fri Oct 19, 2012 12:16 am
by FL787
Quoting LAXintl (Reply 11):
Walk Up = Full Fare

Is that true 100% of the time? For example I can buy a discounted FL ticket in C class tomorrow. Is that full fare? I realize she was talking about WN but I'm just using FL as an example.

RE: WN Reports Q3 Profit - $16M

Posted: Fri Oct 19, 2012 12:21 am
by FL787
A better example would be the fact I can buy an L fare on BWI-GRR tomorrow on FL. That's definitely not full fare.

RE: WN Reports Q3 Profit - $16M

Posted: Fri Oct 19, 2012 12:42 am
by LAXintl
You are splitting hairs. It really comes down to parlance, and not literal meaning.

Its actually normal to be able to find and offer some discount and not stick the passenger with a basic Y fare.
Some airlines such as AA virtually always have one form of discount economy fare available to the last minute - even if its merely a slightly cheaper B or sometimes even cheaper M or H fares.

Also, walk up (same day) fares are trated for accounting as full fare at many airlines regardless of the actual fare basis sold.

RE: WN Reports Q3 Profit - $16M

Posted: Fri Oct 19, 2012 12:55 am
by FL787
Quoting LAXintl (Reply 14):
You are splitting hairs.

I was just curious because I thought there was a difference but...

Quoting LAXintl (Reply 14):
Also, walk up (same day) fares are trated for accounting as full fare at many airlines regardless of the actual fare basis sold.

If this is the case then I stand corrected.

You are already on my respected user list because I appreciate the information you share and also the conference call summaries so please don't take my posts as if I was trying to be snarky.

RE: WN Reports Q3 Profit - $16M

Posted: Fri Oct 19, 2012 1:10 am
by ouboy79
Yeah the Walk Up = Full Fare can get confusing. There are plenty of markets where there are "Wanna Get Away" (NR fares) still available on day of travel that can be pretty good discounts off of full Y. They can be life savers though and a great way to drive some last minute traffic.

RE: WN Reports Q3 Profit - $16M

Posted: Fri Oct 19, 2012 4:34 am
by pu
Quoting DFWHeavy (Reply 4):
I'm also a little surprised WN doesn't have a little more cash on hand. I figured it would be in the $4-5 bill range.

The legacies carry a lot of cash, which is a bad use of assets, because they are considered so fundamentally unstable. Their business partners, Wall Street and their lenders demand it.

In a healthy industry, they would be expected to use the cash to pay down their massive debt, but the legacies have to keep cash on hand just to somewhat ensure they even survive!

WN is a much less complicated business model than the hub and spoke model: unprofitable routes are simply cancelled; their costs rise fairly close to a rise in revenue because of their simple pricing model.... while legacy costs are much more fixed, nonperforming routes aren't as easily cancelled without hurting the hub, and they have almost no pricing power to match costs with revenue the way WN does.

Look, for example, at another well known travel related company conisdered very well managed: Marriott. They only keep a tiny amount in cash...a few hundred million dollars.

Pu

[Edited 2012-10-18 21:37:18]