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Southwest posts double-digit Q1 cargo gains

By control on April 19, 2012

Southwest Airlines posted notable cargo growth during the first three months of 2012, with revenues surging 19.4 percent, year-over-year, to $37 million. The carrier also reported a net income of $98 million for the first quarter, although staggering fuel prices led to an $18 million net loss.

Operating income also slid considerably during the first quarter of 2012, falling from $114 million to $22 million, year-over-year. Excluding special items, operating income totaled $10 million in the first three months of 2012, compared to $110 million in the first quarter of 2011.

Southwest CEO Gary Kelly said this discrepancy comes down to one huge factor: fuel prices. “The decline in operating income was driven by a $478 million increase in our first quarter economic fuel costs, compared to first quarter last year,” he said in a statement. “Energy price increases continue to pressure costs, which only serve to reinforce our commitment to eliminate waste and maximize efficiency throughout our company.”

Overall, however, Kelly said he’s impressed by the carrier’s first-quarter performance. “Despite a modest loss, excluding special items, our results were notable, with outstanding revenue production and, except for jet fuel, better-than-expected operating costs,” he stated.

Kelly attributes Southwest’s “record first quarter revenue results” to efficient revenue management, network optimization, and the benefits of the carrier’s May 2011 acquisition of AirTran Airways.

Southwest’s merger with AirTran Airways also led to the February 12 launch of Southwest’s 26,000-square-foot cargo facility at Hartsfield-Jackson Atlanta International Airport; the carrier initiated passenger service to Atlanta that same day.

Wally Devereaux, Southwest’s director of sales and marketing, told Air Cargo World in January that the decision to launch freight services in Atlanta was strategic. Calling Atlanta a “critical city” for Southwest Airlines Cargo, Devereaux anticipates operations taking off tremendously once the operations of Southwest and AirTran fully integrate.

“We expect our Atlanta cargo operation to be one of the largest in the Southwest Airlines system,” Devereaux said.

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