Southwest Airlines beats market expectations with earnings

Southwest Airlines beats market expectations with earnings

US Airline Industry is in a pretty contrast state. Airlines like US Airways is in a state of bankruptcy and 4 airlines including Delta Airlines has just reported increasing fairs to counter the increasing prices of aviation fuels. In comparison, Southwest Airlines has beaten the market expectations to report an improved earning by 41%. This has resulted in a per share earning of 20 cents compared to market expectations of 18 cents a share.

The company achieved it by cutting costs and raising ticket prices, which bought in enhanced revenues. Market analyst, Rick Applegate spoke about Southwest Airlines performance: “This is now the 57th quarter of profitability since 1991, a pretty strong story. They are doing what they can do keep their unit costs down as much as possible with careful growth.” the company also reported an improved operating revenues of $1.94 billion from $1.72 billion last year.

Southwest Airlines also benefited from extensive purchasing of contracts that lock in prearranged prices of crude and heating oil. This helped them keeping the costs of raw material low with the market pricing increasing and maintaining their profitability. These steps has made the airlines a darling for the investors and one of the most valuable on in the market in spite of the fact that it is on the sixth position in the market in terms of revenue passenger miles.

Applegate added: “The fuel into the future is going to be the big issue. It’s not the same detriment to their survival that oil prices will be to these other airlines.” the company also said that their cash on hold status is at around USD 2.3 Billion at the end of the quarter which is another key measure of the health of the company.