Southwest’s profits soar, helped by fuel hedging program

Southwest’s profits soar, helped by fuel hedging program    Low-cost Dallas-based Southwest Airlines, said “strong performances in freight, charters, and business partner commissions,” as well as a successful fuel hedging program helped it to achieve a 90.8 percent rise in net income to $227 million. The airline’s net income in the third quarter 2004 was $119 million.
   During the latest quarter, Southwest’s fuel and oil expenses increased 36.4 percent to $337 million, compared to $247 million in the same quarter 2004.
   “We continue to mitigate record-high jet fuel prices with our successful hedging program, which resulted in a $295 million benefit from settled contracts in third quarter 2005. We are also approximately 85 percent hedged in fourth quarter 2005 with average crude prices capped in the $26-per-barrel range,” said Gary C. Kelly, Southwest’s chief executive officer.
   Operating income reached $273 million in the third quarter, up 42.9 percent from $191 million in the same quarter last year. Operating revenues increased 18.8 percent to $1.98 billion from $1.67 billion. Freight revenues jumped 14.3 percent to $32 million from $28 million.
   For the year to date, Southwest reported a net income of $462 million, up 79.1 percent compared to $258 million in the first nine months of 2004. The airline’s operating income increased 50.8 percent to $656 million from $435 million. Revenue between January-September improved 14.8 percent to $5.59 billion from $4.87 billion.
   Southwest’s shares closed down 51 cents (or 3.27 percent) at $15.07 at close of business Thursday on the New York Stock Exchange.