Southwest profitable in 1Q2010, sees improving revenue performance; Virgin America loss in 2009


Southwest Airlines’ shares slipped 1.0% yesterday coinciding with the release of the carrier’s 1Q2010 financial results, in which the carrier reported a net profit of USD11 million in the quarter, a turnaround from a net loss of USD91 million in the previously corresponding period. The carrier was also profitable at the operating level, with a USD54 million operating profit, compared to a USD50 million loss in 1Q2009.

The US LCC also reported record first quarter performance for load factors (+6.0 ppts to 75.9%), passenger yields (+9.1%) and passenger revenues (+10.8% to USD2.5 billion, with total operating revenues up 1.6% to USD2.6 billion). Furthermore, 1Q2010 operating unit revenues, and the corresponding 19.3% year-on-year increase, represent all-time quarterly records.

CEO, Gary E Kelly, commented, “to achieve this revenue performance in, seasonally, the weakest quarter, is notable. To do so in a recovering economic environment is truly remarkable”.  The carrier added that so far, strong load factor and yield trends have continued in Apr-2010, with the carrier anticipating another “significant” year-on-year unit revenue gain in 2Q1010. 

Virgin America reports loss in second full year of operation

Privately held Virgin America also reported financial results yesterday, for 4Q2009 and FY2009. While the carrier made significant top line progress in its second full year of operations, it remained loss-making, with operating and net losses of USD48.1 million and USD80.8 million respectively. This, however, is an improvement from the losses of USD188.1 million and USD209.6 million in 2008.

Although the revenue and demand environment remained challenging in the final quarter of 2009, Virgin America reported strong revenue performance (revenue up 29% to USD153 million), “industry-leading” load factors (up 3.1 ppts to 84.3%) and improved unit costs (down 17.6% including fuel and 23.5% ex-fuel) for the fourth quarter. The airline narrowed its operating loss by USD11 million year-over-year in the quarter, to USD10.2 million, improving its operating margin by 10.9 ppts. 

AirTran swings to a loss in 1Q2010

Also yesterday, shares in AirTran were up 0.9%. The carrier, on 21-Apr-2010, posted a loss of USD12 million in 1Q2010, a substantial swing from the year-ago period when it earned USD28.7 million. AirTran benefited from USD4.7 million in unrealised gains on future fuel hedges, without which it would have had a net loss of USD16.7 million. See related article: AirTran posts loss, won’t initiate merger

Selected LCCs daily share price movements (% change): 22-Apr-2010

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