Net income was $741
million, or $1.37 per share, compared with $733 million, or $1.27 per share, in the year-ago period. Analysts
had forecast EPS of $1.34.
Unit revenues (RASM) increased 6.8%, driven mainly by a
passenger revenue yield increase of 4.2%, and a load factor increase of 1.7
points. Load factor reached an all-time quarterly record of 86.4%. Revenue
passenger miles fell 1.7% while available seat miles (ASM) dropped 3.6%.
Total operating expenses rose 3.6% to $4.9 billion. Unit
costs (CASM) increased 7.5%. Economic fuel costs were $2.13 per gallon compared
to $2.21 per gallon in the year-ago quarter. Fuel efficiency decreased 1.7% year-over-year,
due to the removal of the company’s most fuel-efficient aircraft from its
schedule as a result of the MAX groundings.
For the third quarter of 2019, Southwest expects RASM to
increase 3-5% versus last year. CASM, ex fuel, is expected to rise 9-11%. Available
seat miles are expected to decrease 2-3%. Fuel efficiency is expected to
decrease 1-2% year-over-year as a result of the MAX groundings. Economic fuel
costs are estimated to be $2.05 to $2.15 per gallon.
For the full year of 2019, CASM, excluding fuel and oil
expense and profit-sharing expense, is expected to increase 8-10% year-over-year.
ASMs are expected to decrease 1-2% year-over-year.
Due to the delay in MAX deliveries, and based on current guidance from Boeing assuming regulatory approval of MAX return to service during the fourth quarter of 2019, Southwest now estimates its 2019 capital expenditures to be in the range of $1.2 billion to $1.3 billion, compared with its previous guidance in the range of $1.9 billion to $2 billion.
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