Thursday, May 15, 2003 | 9:45 a.m.
DALLAS -- Southwest Airlines, the only major U.S. carrier to remain profitable the past two years, expects to continue in the black this year, Chief Executive James F. Parker said Wednesday.
Southwest, bucking the shrinking schedules of other carriers, also announced during its annual shareholder meeting that it will add flights and expects to raise some fares this summer.
In the first three months of this year, Southwest eked out a $24 million gain, one of its weakest quarters since 1991 and only one-fifth the profit it posted in the same period of 2001, before the full effect of recession and terror attacks.
Parker said the decline was "entirely attributable" to the industry's slump but declared that Southwest is still growing.
"Barring any unforeseen events, we expect to be profitable this quarter and this year," he added, without setting numerical goals.
Parker said Southwest would buy 17 new Boeing 737s and add them to the fleet this year, replacing six planes that are being retired.
The additional aircraft will help Southwest add flights on some existing routes this summer and fall. Many of the extra flights are from Las Vegas, San Diego, Orange County, Calif., and Baltimore. Southwest flies to 59 cities in 30 states. It's the busiest carrier in Las Vegas.
Chairman Herb Kelleher, noting that the other major U.S. carriers have in the past week announced $10 round-trip fare increases to take effect June 1, said Southwest would make more modest increases on some routes.
"We normally have a fare increase this time of year, as we head into the summer, but it won't be systemwide," Kelleher said. He declined to elaborate.
Most annual meetings of airline shareholders have been grim affairs since the recession and the September 2001 terror attacks sent the industry into its deepest tailspin ever. Southwest, however, has continued to post a profit every quarter, and its meetings have remained bubbly events.
Other carriers say they are taking notice of the success of low-cost carriers such as Southwest and JetBlue and are cutting labor costs. American Airlines, on the brink of bankruptcy several times this year, got employees to approve $1.8 billion in annual labor concessions.
Parker said the hub-and-spoke carriers like American can't match Southwest's cost structure, even with labor concessions.
"Our cost advantage is not predicated on paying low wages," Parker told reporters. He said the airline had higher worker productivity and more efficient use of planes.
For example, Southwest flies out of Dallas Love Field but not the larger Dallas-Fort Worth International because it would face higher costs due to delays and longer taxiing distances at the bigger, busier airport.
"We will continue to have a commanding cost advantage over the hub-and-spoke carriers," Parker said.
Southwest reached agreements with several labor groups last year but is still negotiating with 7,300 flight attendants.
Thom McDaniel, president of Local 556 of the Transport Workers Union, said the workers want to be paid for time they are on duty but not flying and want the company to provide breaks and meals. Despite bargaining for nearly a year, the two sides have not begun to talk about pay.
In trading Wednesday on the New York Stock Exchange, Southwest shares fell 15 cents to $15.78.
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