Southwest profit beats estimates on higher fares, demand

DALLAS, Thu Jul 19, 2012 – Southwest Airlines Co. beat analysts’ estimates with a 42-percent rise in quarterly profit on Thursday, helped by higher fares and robust demand despite a fragile U.S. economy.
U.S. airlines have merged, raised ticket prices and shown discipline in cutting back flights to match demand in a bid to return to stability over the past two years.
“Southwest and the rest of the airlines are really focusing in on the routes that are higher-yielding and more profitable, and as a whole that has helped the industry,” said Matthew Jacob, an airline analyst with ITG Investment Research.
Analysts said Southwest, which is looking to maintain its dwindling low-cost advantage against rivals that have restructured, made progress in controlling costs in the quarter.
Southwest, which acquired discount rival AirTran Holdings last year, said second quarter net income was $228 million, or 30 cents a share, compared with $161 million, or 21 cents a share, a year earlier. Excluding items, profit was 36 cents a share, higher than analysts’ expectations of 32 cents, according to Thomson Reuters I/B/E/S.