Southwest Airlines Co. Earnings: Beats the Street on Profit Rise

S&P 500 (NYSE:SPY) component Southwest Airlines Co. (NYSE:LUV) reported net income above Wall Street’s expectations for the fourth quarter. Southwest Airlines is a passenger airline that provides air transportation in the United States.

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Southwest Airlines Earnings Cheat Sheet for the Fourth Quarter.

Results: 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.

Actual vs. Wall St. Expectations: 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.

Quoting Management: 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.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 26.1%, with the biggest boost coming in the third quarter when revenue rose 35.1% from the year earlier quarter.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with net income of 15 cents versus a mean estimate of net income of 13 cents per share.

The company reported a profit last quarter after being in the red the prior quarter. In the second quarter, the company booked a net loss of $161 million or a loss of 21 cents per share.

Looking Forward: Analysts have a more positive outlook about the company’s results for next quarter. The average estimate for first quarter of the next fiscal year is 18 cents per share, an increase from 6 cents sixty days ago. The average estimate for the fiscal year is 42 cents per share, up from 41 cents seven days ago.

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).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com