Southwest Reports $321 Million in Second-Quarter Profits

Southwest Airlines reported net income for second quarter 2008 was $321 million, or $0.44 per diluted share, compared to $278 million, or $.36 per diluted share, for second quarter 2007. Excluding special items, second quarter 2008 net income was $121 million, or $0.16 per diluted share, compared to $195 million, or $.25 per diluted share, for second quarter 2007.

The second quarter 2008 results exceed First Call’s mean estimate of $.12 per diluted share. The airline reported record quarterly revenues of $2.9 billion, up 11.1 percent from second quarter 2007; net income, excluding special items, of $121 million, down 37.9 percent; net income per diluted share, excluding special items, of $.16, down 36 percent; favorable cash settlements of $511 million from fuel contracts were reflected in net income, excluding special items

Even with $511 million in favorable cash settlements from derivative contracts in the second quarter 2008, Southwest’s economic fuel costs increased 35.2 percent to $2.19 per gallon. Although better than anticipated, the considerable year-over-year increase in fuel costs was by far the most significant driver of the 10.5 percent increase in the airline’s second quarter 2008 unit costs, excluding special items.