Southwest Airlines yearly profits drop $220 million

Washington DC
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Southwest Airlines today reported that net income excluding special expenses dropped $220 million last year compared to results in 2010 despite a fourth quarter surge in revenue and yields.

The Dallas-based carrier posted a $330 million profit for the full year, including $66 million earned in the fourth quarter excluding special expenses. In 2010, Southwest reported a $115 million profit in the fourth quarter alone, and $550 million for the full year.

Reporting a year-over-year decline in profits is "always disappointing", said Gary Kelly, Southwest's chairman, president and CEO.

But Kelly also described revenue performance for the year as "outstanding", with record yields posted in the fourth quarter.

However, those results could not offset soaring cost growth, driven by a 34.7% jump yearly fuel costs per gallon to $3.18, which does not appear to be slowing in the first quarter of this year, Southwest said. As of 13 January, the price of a gallon of jet fuel stood at $3.35.

Year-over-year unit costs will likely increase again in the first quarter of this year, Southwest said.

The acquisition of AirTran, which was finalized on 2 May, added $80 million in net "synergies" before taxes to Southwest's balance sheet, the carrier said.

The year also generated more than $400 million in free cash flow in 2011, Southwest said.