Southwest’s net profit soars 75.1% in 2005
Southwest Airlines achieved double-digit increases to its net profit, operating income and revenue for the fourth quarter and the full year 2005.
The Dallas-based low-cost airline reported a net income of $86 million in the fourth quarter, up 53.6 percent from $56 million in the same period 2004. Southwest’s operating income improved 35.8 percent to $163 million from $120 million. Operating revenues increased 20.1 percent to $1.98 billion from $1.65 billion. Freight revenues jumped 2.9 percent to $35 million from $34 million.
Included in the fourth quarter results is a $24 million (before profit sharing and income taxes) additional federal airport security expense due to a retroactive assessment by the Transportation Security Administration. The TSA made the assessment earlier this month “without notice or opportunity to protest. This assessment was completely unexpected, and the company believes it is improper and plans to vigorously contest it,” Southwest said.
For the full year, Southwest reported a net income of $548 million, up 75.1 percent from $313 million in 2004. The airline’s yearly operating income increased 48 percent to $820 million from $554 million. Operating revenue in 2005 rose 16.1 percent to $7.58 billion from $6.53 billion. Freight revenues were up 29.3 percent to $172 million from $133 million.
Despite a hedging program, which resulted in a $258 million benefit in the fourth quarter, Southwest’s annual fuel and oil expenses increased 34.2 percent to $1.34 billion from $1 billion in 2004.
“I am pleased to report a significantly improved earnings performance for the fourth quarter and full year 2005, which represented our 33rd consecutive year of profitability,” said Gary C. Kelly, Southwest’s chief executive officer.
Southwest’s shares on the New York stock exchange closed Wednesday up 89 cents (or 5.61 percent) to $16.76.