Low fuel costs, other factors propel Southwest Airlines to record first quarter

A combination of low fuel costs, reduced operational expenses and more flying from the company’s Dallas headquarters propelled Southwest Airlines to a record first quarter, the company announced Thursday.

Southwest, the busiest commercial air carrier at Las Vegas’ McCarran International Airport, reported net earnings of $453 million, 66 cents a share, on revenue of $4.41 billion.

That nearly tripled earnings of $152 million, 22 cents a share, on revenue of $4.17 billion, up 6 percent over the first quarter of 2014.

A survey of 18 analysts had projected earnings per share of 65 cents.

In a statement issued by the company, Chairman, President and CEO Gary Kelly said the performance “far surpasses any first-quarter profit in our history and represents our eighth consecutive quarter of record profits.”

Kelly said Southwest benefited from longer flights, larger aircraft and lower maintenance costs reducing unit costs by 12.5 percent. In addition, the company paid just $2 a gallon on average for fuel compared with a price of $3.06 a gallon in the same quarter a year earlier.

Southwest had record passenger counts at McCarran in 2014 and in the first two months of 2015 is ahead of last year’s pace, thanks, in part, to a greater use of the airline’s larger Boeing 737-800 jets that carry 175 passengers and the inclusion of additional flights between Las Vegas and Dallas Love Field.

In Thursday’s conference call with investors, Kelly called the company’s Dallas flights “a raging success” and said flights from that airport have been more than 90 percent full on average. Southwest controls 18 of the airport’s 20 gates.

Southwest was able to add nonstop flights from Dallas as a result of the repeal of the Wright Amendment in October.

In Las Vegas, Southwest has had minimal growth in the number of flights, increasing from 204 a day a year ago to 206 a day today. But the number of seats into the market has increased from 29,724 a day to 30,392 a day. The airline holds a 42.5 percent market share at McCarran.

Southwest is projecting moderate growth of less than 1.5 percent in the number of seats to the Las Vegas market through June.

Because the larger aircraft require more flight attendants — four per flight instead of three — the airline has hired 2,000 more employees over the last year and Kelly said most of those were a result of flying the larger planes.

The airline is acquiring 19 more -800 series jets in 2015 and 17 new -700 jets this year. It has options to add 12 -800s each in 2016, 2017 and 2018 and options for four -700s in 2017. At that point, Southwest plans to expand its fleet with Boeing’s MAX jet design, a lighter, more fuel-efficient 737 variant.

Southwest figures larger and more efficient aircraft will benefit the company as it expands its presence, particularly internationally. The airline added San Jose, Costa Rica, to its route map last month and is on track to add Puerto Vallarta, Mexico, in June and Belize City, Belize, in October.

The company’s new international terminal is due to open at Houston’s Hobby International Airport in October.

Most of Southwest’s international flying is occurring from Baltimore and Orange County, Calif.

There are no immediate plans to fly internationally from Las Vegas, the company has said.

Shares of Southwest Airlines rose 41 cents, or nearly 1 percent on Thursday, to close at $43.26. They also trended higher in after-hours trade.