Southwest posts $16m net income in 3Q

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Southwest Airlines today reported a net income of $16 million in the third quarter including special items.

The three-month result is an improvement over a $140 million net loss during the same period a year ago.

Southwest chairman and chief executive Gary Kelly acknowledged weaker unit revenue growth than expected in the third quarter, especially in September.

Total operating revenues, including AirTran's results, remained essentially flat in the quarter at $4.31 billion, while operating costs grew by 4.2% to $4.26 billion. The biggest change in operating costs was for "acquisition and integration", which rose from $22 million in the third quarter a year ago to $145 million.

Passenger traffic dipped slightly in the third quarter by 0.6% to $27.2 million revenue passenger miles. But load factor's rose 0.1 points to 82.1% on a 0.7% decrease in capacity, as measured by available seat miles.

Southwest's unit revenues, as measured by passenger revenue available seat miles, increased 1% to 12.23 cents. But that improvement was out-paced by unit costs, which rose 5% to 12.87 cents.

During the quarter, the company incurred a $145 million charge from its agreement to transfer 88 Boeing 717s leased from Boeing Capital to Delta Air Lines. The overall cost to transfer the fleet is estimated at $550 million, Southwest says.