Southwest Airlines Earnings: Profits Return to Higher Altitude

S&P 500 (NYSE:SPY) component Southwest Airlines Co. (NYSE:LUV) climbed to a profit in the third quarter, but still came up short of analyst expectations. Southwest Airlines is a passenger airline that provides air transportation in the United States.

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Southwest Airlines Co. Earnings Cheat Sheet

Results: Reported a profit of $16 million (2 cents per diluted share) in the quarter. Southwest Airlines Co. had a net loss of $140 million or a loss 18 cents per share in the year-earlier quarter.

Revenue: Remained constant at $4.31 billion.

Actual vs. Wall St. Expectations: Southwest Airlines Co. reported adjusted net income of 13 cents per share. By that measure, the company fell short of mean estimate of 31 cents per share. It fell short of the average revenue estimate of $4.58 billion.

Quoting Management: Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “Our third quarter 2012 net income was $97 million, and operating income was $208 million, each excluding special items. Our third quarter 2012 passenger revenues, unit revenues, and load factor were all third-quarter records and meaningful accomplishments; however, we need sustained revenue momentum to achieve our return on invested capital target. And, that is a priority.”

Key Stats:

After beating analyst estimates for the two previous quarters, the company fell short of forecasts. In the second quarter, it topped the mark by 3 cents, and in the first quarter, it was ahead by 3 cents.

Over the last five quarters, revenue has increased 21.4% on average year-over-year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 35.1% from the year-earlier quarter.

Looking Forward: Next quarter’s results are expected to be more favorable for the company. Over the past sixty days, the average estimate for the fourth quarter has reached 22 cents per share, up from 18 cents. Over the past three months, the average estimate for the fiscal year has climbed from 69 cents per to share to 82 cents.

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

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