Southwest Airlines and Union Pacific Stocks in Trading Spotlight After Earnings

Southwest Airlines Co. (NYSE:LUV) reported net income above Wall Street’s expectations for the fourth quarter. Net income for the airline rose to $152 million (20 cents per share) vs. $131 million (18 cents per share) in the same quarter a year earlier. This marks a rise of 16% from the year earlier quarter. Revenue rose 31.9% to $4.11 billion from the year earlier quarter. LUV reported adjusted net income of 9 cents per share. By that measure, the company beat the mean estimate of 7 cents per share. Analysts were expecting revenue of $4.13 billion.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “Excluding special items, fourth quarter 2011 net income was $66 million, and full year 2011 net income was $330 million. We had an outstanding revenue performance. Our fourth quarter operating revenues were a record $4.1 billion. Fourth quarter passenger revenues were strong, driven by record yields and continued high load factors. Compared to the prior year, our fourth quarter passenger unit revenues increased 8.2 percent (on a combined basis, as defined below). Based on current traffic and booking trends, we expect another strong passenger revenue performance in first quarter of 2012.”

Competitors to Watch: AirTran Holdings, Inc. (NYSE:AAI), JetBlue Airways Corp. (NASDAQ:JBLU), Delta Air Lines, Inc. (NYSE:DAL), AMR Corporation (NYSE:AMR), US Airways Group, Inc. (NYSE:LCC), Allegiant Travel Company (NASDAQ:ALGT), Republic Airways Hldgs. Inc. (NASDAQ:RJET), SkyWest, Inc. (NASDAQ:SKYW), Alaska Air Group, Inc. (NYSE:ALK), and United Continental Hldgs., Inc. (NYSE:UAL).

Union Pacific Corporation (NYSE:UNP) reported net income above Wall Street’s expectations for the fourth quarter. Net income for the railroad company rose to $964 million ($1.99 per share) vs. $775 million ($1.56 per share) in the same quarter a year earlier. This marks a rise of 24.4% from the year earlier quarter. Revenue rose 15.8% to $5.11 billion from the year earlier quarter. UNP beat the mean analyst estimate of $1.81 per share. Analysts were expecting revenue of $5.05 billion.

“The dedicated efforts of our employees, combined with the strength of our diverse railroad franchise, drove record fourth quarter results,” said Jim Young, Union Pacific chairman and chief executive officer. “In 2011, we achieved best-ever marks in customer satisfaction and employee safety, invested a record $3.2 billion in capital, and generated record free cash flow of $1.9 billion. Two-thousand-eleven was the most profitable year in Union Pacific’s history, allowing us to reward shareholders with increased financial returns.”

Competitors to Watch: Kansas City Southern (NYSE:KSU), CSX Corporation (NYSE:CSX), Norfolk Southern Corp. (NYSE:NSC), Canadian National Railway (NYSE:CNI), Canadian Pacific Railway Ltd. (NYSE:CP), Genesee & Wyoming Inc. (NYSE:GWR), Providence & Worcester Railroad Co. (NASDAQ:PWX) and RailAmerica, Inc. (NYSE:RA).