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Southwest Airlines reports earnings record in 3Q

Airline is the market leader at McCarran, expects strong fourth quarter


Sun file photo

Southwest Airlines planes sit at McCarran International Airport.

Updated Thursday, Oct. 21, 2010 | 11:45 a.m.

Southwest Airlines earnings report

  3Q 2010 3Q 2009 % Change 2Q 2010
Revenue $3.19 billion $2.67 billion 19.7% $3.17 billion
Earnings $205 million ($16 million) -- $112 million
Earnings per share 27 cents (2 cents) -- 15 cents

Dallas-based Southwest Airlines, the market leader at McCarran International Airport, reported record third-quarter revenue and earnings today, joining a list of profitable U.S. air carriers that saw summer travel rebound from the darkest days of the recession.

Company officials also said fourth-quarter bookings in the traditionally soft October and November months look good.

"Our outlook for October is excellent, based on traffic and revenue trends, thus far, Southwest President and CEO Gary Kelly said in a release announcing earnings. "We are encouraged by the sustained momentum, especially in what is typically a seasonally weaker travel period. Assuming traffic and revenue trends continue, we expect a solid unit revenue improvement in fourth quarter 2010, even with more difficult year-over-year comparisons."

That projection bodes well for Southern Nevada resorts, since Southwest has a nearly 45 percent market share of flights going in and out of McCarran.

Southwest reported earnings of $205 million, 27 cents a share, on revenue of $3.19 billion, compared with a loss of $16 million, 2 cents a share, on revenue of $2.67 billion in the same quarter a year earlier. Kelly said excluding special items, including the company's fuel hedge allowance, net income was a record for the third quarter. Earnings reported were 1 cent higher than Wall Street projections.

Third-quarter revenue also was at a record level.

A conference call was scheduled later today to discuss the results.

Southwest was the seventh air carrier to post third-quarter profits. Earlier in the week, United, Continental, Delta, American, US Airways and JetBlue reported quarters in the black.

Southwest has several projects under way that could boost Las Vegas.

Earlier this week, the company announced its schedule of flights for two South Carolina destinations, Charleston International Airport and Greenville-Spartanburg Airport. Beginning March 13, Southwest will offer seven flights a day to and from those airports.

Las Vegas is not among the nonstop routes to be served, but the airline has begun selling one-stop flights connecting from Baltimore, Chicago's Midway Airport, Nashville and Houston's Hobby International Airport.

With the addition of those flights, Southwest will operate in 71 destinations in 36 states.

Round-trip fares between Las Vegas and the two airports start at around $300, including taxes and fees.

By the end of the year, Southwest also is expected to announce schedules and fares for its newest destination, Newark, N.J.

Southwest also announced last month that plans to acquire AirTran Holdings stock, which would give it control of Orlando-based AirTran Airlines. Subject to regulatory clearance and approval of AirTran shareholders, the deal is expected to close next year.

The acquisition is expected to give Southwest a presence in the nation's busiest airport, Hartfield-Jackson Atlanta International. Analysts have said by entering that market, fares in Atlanta would fall, giving Las Vegas another major market to aggressively pursue.

Southwest also is in the midst of developing a code-share and marketing partnership with Mexican carrier Volaris. Additional details of that deal are expected to be released next week. It's unknown how much Las Vegas would benefit from the partnership, but Southwest already markets vacation packages to Las Vegas and could potentially have access to Volaris' list of loyal customers to market Southwest destinations.

In addition to the Volaris initiative, Kelly said Southwest would soon announce details of "Rapid Rewards 2.0," an upgrade to the airline's popular frequent-flier program.

The company made no announcements about its efforts to add Boeing 737-800 jets, which have a greater seating capacity than the 737s Southwest already flies, into its fleet.

Last summer, Southwest said it would investigate getting some larger planes, primarily for markets in which the company is restricted in how many flights it can have.

Kelly said the company is poised to grow and has enough on its plate to keep executives busy for the first five years of the decade.

Much of Southwest's recent growth has been at Denver International Airport, which is now the airline's fifth busiest destination.

With the addition of flights next year, Las Vegas will recapture the unofficial title of Southwest's busiest destination with more than 216 daily flights.

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