Southwest Air does not see first quarter profit due to fuel

DALLAS, Tue Mar 13, 2012 − Southwest Airlines Co. does not expect to report a profit for the current first quarter because of high fuel prices, the company’s finance chief said on Tuesday.

The carrier, which acquired AirTran last year, said it expects fuel costs of about $3.50 a gallon for the first period, about 15 cents higher than its prior forecast.

“If you look at the last few fare increases, they’ve become less effective,” CFO Laura Wright told a JPMorgan Aviation, Transportation and Defense conference that was broadcast over the Internet.

“No surprise; any business that raises fares that many times in a short period of time would expect to see that,” Wright added. She cited 10 rounds of fare rises in the last year.

The company said passenger revenue per available seat mile, an important measure, rose 4 percent in February, weaker than expected and compared with a 7 percent rise for January. Wright said close-end bookings toward the end of February were weaker.

“For March, bookings remain good but we are cautious,” Wright said. She added it was too early to discern if the February weakness was a “sign of something going on in the economy” or an anomaly.

Oil prices traded up on Tuesday, with Brent crude near $126, as investors awaited comments from the U.S. Federal Reserve that may confirm an improving outlook.