Southwest Airlines announced (15-May-2013) its 147th consecutive quarterly dividend of USD0.04/share from USD0.01/share. The dividend amounts to over USD100 million on the close of business on 05-Jun-2013. Southwest Airlines’ board also increased its existing USD1 billion share repurchase authorisation to USD1.5 billion. The remaining share repurchase authorisation of USD250 million in Southwest common stock will be repurchased through an accelerated stock repurchase programme. [more - original PR Southwest]
Southwest declares 147th consecutive quarterly dividend
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North America Fleet Outlook
North American airlines have roughly 2132 aircraft on order, of which nearly 61% are narrowbody jets pegged for replacement and aircraft upgauge as the region’s large global network airlines continue their strategy of shedding 50 seat jets.
Southwest Airlines and jetBlue take different paths to sustaining balance sheet strength
At nearly 46 years old and 17 years old, respectively, Southwest and jetBlue approach their financial priorities differently. jetBlue is in the process of buying a certain level of aircraft off lease to reduce debt and raise its levels of unencumbered aircraft. Southwest is concluding a hefty investment in a long overdue overhaul of its reservations system and making other significant technology investments.
Each airline also has a different capital allocation strategy. Southwest has engaged in some level of shareholder returns since the 1990s, whereas jetBlue’s shareholder return strategy is just starting to take shape – the airline is reaching a point in its leverage performance where it can contemplate more meaningful levels of shareholder returns in the medium term.
One area where Southwest and jetBlue hold similar visions is balance sheet strength, and the airlines have similar leverage goals: to support capex commitments, maintain manageable debt levels, and expand or sustain return to shareholders.