Southwest to keep 2014 capacity flat

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Southwest Airlines will keep 2014 capacity flat as it opts to focus its attention on several ongoing initiatives at the airline that will keep it busy in the next two years.

The airline will grow capacity by about 2% in 2013, but will not grow available seat miles next year, says Tammy Romo, its chief financial officer.

This is as Southwest continues to make progress on several projects that have occupied its attention in the recent years, mainly linked to its acquisition of AirTran and its fleet modernisation programme.

Southwest is on track to fully integrate AirTran into its operations by the end of next year, says the airline's chief executive Gary Kelly. It expects about $400 million in annual net pre-tax synergies from the merger in 2013. Romo says about $120 million of this was realised during the third quarter.

About 15% of Southwest's systemwide flying is still being done under the AirTran brand, says Kelly.

The airline began transitioning AirTran's Boeing 717s to Delta Air Lines in the quarter, and still expects to transfer 15 more by the end of the year. That will leave 62 717s to be transitioned to Delta livery after 2013. "There's a lot of work involved in that fleet conversion," says Kelly.

The 717s aside, Southwest is still in the midst of transitioning AirTran's 52 737-700s to Southwest's livery and interiors. The airline had transitioned 14 aircraft as of the end of the third quarter, and will transition five more by end-2013. The remaining 33 737-700s will transition in 2014 when Southwest's international reservations system is in place to handle AirTran's international flying.

The carrier says today it is on track to meeting this 2014 milestone. "We are nearing the point where we can release some milestones but I'm not ready to do that yet," says Kelly. "2014 is still the plan and it's going to happen."

Separately, the carrier has completed the retrofit of the majority of aircraft under its Evolve project, which adds an extra six seats on board for a total of 143. As of the end of the third quarter, the airline had completed the retrofit on all Southwest 737-700s, 78 737-300s and 14 of AirTran's 737-700s. This leaves only the remaining 38 AirTran 737-700s to be retrofitted.