Southwest's Q2 operating profit falls slightly

Washington DC
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Southwest Airlines reported an operating profit of $433 million, down 5.9% from the second quarter of 2012.

The Dallas-based carrier earned a net profit of $224 million during the period, down 1.8% from the same period last year, the airline reports in a statement today.

Southwest's president and chief executive Gary Kelly says he is pleased with the results.

"This performance benefitted from all-time high operating revenues and lower fuel prices. In addition, our focus on managing costs resulted in modest year-over-year cost inflation despite significant investments in fleet modernisation and other strategic initiatives," he says in the statement.

The company carried 29 million passengers during the period, roughly in line with the same period last year, and reported 27.9 billion revenue passenger miles, up nearly 3% year-over-year.

Operating revenue during the period increased roughly 0.6% to $4.6 billion, while operating expenses climbed 1.3% to $4.2 billion, year-over-year.

Kelly says lingering effects of the US government's so-called budget sequester and higher taxes continue to depress travel demand.

Southwest's cost per available seat mile (CASM) for the period was 12.3 cents, down 1.7%, and revenue per available seat mile (RASM) was 13.6 cents, down 2.4%, according to the airline.

Average load factor during the period was 81.6%, down from 81.9% during last year's second quarter.

Southwest reports it has some $3.7 billion in cash and short-term investments.

The company notes that it spent $26 million during the quarter on the acquisition and integration of subsidiary AirTran Airways.

Southwest says it is encouraged with the level of third-quarter ticket bookings, noting that July bookings are roughly 3% above the same period last year.