Southwest moves 15% ROIC goalpost to 2014

Washington DC
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Southwest Airlines is still working towards achieving a 15% return on invested capital (ROIC) in 2014, a key target that it has missed the last two years.

The Dallas-based carrier has constantly cited the metric in the recent years as the driver for important decisions, may it be capacity discipline or aircraft deferrals. However, it is unlikely to hit the ROIC goal in 2013, executives have acknowledged.

"We are working on a 2014 plan and [it] will have a target of 15% in 2014," Southwest's chief financial officer Tammy Romo tells Flightglobal today on the sidelines of the Raymond James Global Airline Conference in New York.

Southwest posted a ROIC of 11% in the 12 months ending 30 September, compared with 7% in the same period a year ago. But Romo says the carrier has been impacted by events like the US government shutdown and sequestration.

Romo said last month the government shutdown impacted revenues by about $20 million. The carrier has also acknowledged that ongoing developments at Southwest have resulted in earnings drag. These include the integration of AirTran Airways, a fleet modernisation project and preparing Southwest to handle AirTran's international flights.

With additional reporting by Edward Russell