Southwest Reports Rise in Second Quarter Net Income to $288 Million
Southwest Airlines, a day after American Airlines reported a $241 million loss for the second quarter, much of it due the fact that it is operating under bankruptcy protection, reported second quarter 2012 net income was $228 million, up from $161 million in the same quarter last year. The low-cost carrier, which is still in the process of fully merging with AirTran, said that excluding special items, second quarter 2012 net income was a record $273 million, compared to $121 million in second quarter 2011.
Operating income for second quarter 2012 was $460 million, compared to $207 million in second quarter 2011. Excluding special items, operating income was a record $485 million for second quarter 2012, compared to $276 million for the same period last year.
"We are very pleased to report second quarter net income, excluding special items, that more than doubled second quarter last year,” said Gary Kelly, Southwest’s chairman, president, and CEO. “Record revenues driven by steady growth were sufficient to overcome high jet fuel prices and produce a record operating income of $485 million, and a record net income of $273 million, both excluding special items.”
Kelly said Southwest is producing very strong results despite a fragile economic environment. Operating cash flow for the twelve months ended June 30, 2012 was $1.6 billion, and free cash flow* for that period was over $300 million. During that time, Southwest repaid $964 million in long-term debt, further reducing its debt to total capital ratio to 45 percent. Total cash on hand plus short-term investments, at June 30, 2012, was $3.3 billion.
"We continue to make great progress integrating AirTran into Southwest,” Kelly said. “We received approval by the Federal Aviation Administration for our Single Operating Certificate in March 2012. Since then, we've converted five AirTran aircraft to the Southwest paint and interior configuration, and have begun transitioning AirTran airport facilities to Southwest, with Seattle and Des Moines scheduled to be completed this quarter. The majority of our unions have reached agreements regarding seniority integration, and we are making progress with the remaining agreements. We produced approximately $80 million in net, pre-tax synergies in first half 2012, and we continue to target net, pre-tax synergies of $400 million in 2013.”
Total second quarter 2012 operating expenses were $4.2 billion, compared to $3.9 billion in second quarter 2011, and were comparable to second quarter last year on a combined basis. Second quarter 2012 economic fuel costs were $3.22 per gallon, including $.04 per gallon in unfavorable cash settlements for fuel derivative contracts, compared to $3.28 per gallon in second quarter 2011, including $.03 per gallon in favorable cash settlements.
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