Southwest Airlines Co Earnings Call Nuggets: Row 44 and Checked Bag Fees

Southwest Airlines Co (NYSE:LUV) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Row 44

Michael Linenberg – Deutsche Bank: Just two questions here. You talked about some of the ancillary revenue opportunities, and I saw the press release out not too long ago, that the Row 44 product, I think it’s in 300 or 400 of your airplanes. How is it doing thus far? Or what’s the uptick? What’s the opportunity there, how should we think about it?

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Gary C. Kelly – Chairman, President and CEO: Well, I think considering that the installation time has be pretty lengthy and we haven’t had a majority of the aircraft that were installed, as a consequence, we didn’t any marketing awareness or merchandising of that feature behind it in any meaningful way. Considering that that’s about where we’re here Mike in 2012 I think it’s done fine. The reliability of the product was not where we wanted it to be in prior years. It’s now running last statistics I saw were 98% which is not quite good enough, but it’s not too bad considering, the leading edge technology that it really offers. We did last year Tammy, I think we did $5 million or so in revenue from the product. Obviously, we’re looking for a lot more than that. The take rates are escaped me at this hit the moment but I want to say that clearly long-haul has a better take rate than the short-haul does. It’s little bit behind our expectations, but again I would attribute a lot of that to comments that I’ve already made.

What is very exciting that we put in the press release and again our marketing folks are going to get behind the product this year and start promoting it much more heavily is we do have a live television feature. It is really good. They are going to increase the offerings with that and we’ll also be in a position where we can offer some video on-demand and that’s just of course in addition to the straight up Internet access. So, I think it has a lot of potential. I don’t think that history is going to be guide and I’m anxious to see what happens this year. Bob so in terms of your $1.1 billion revenue plan it’s not a material element of that. So, I think that’s just a pure upside for us.

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