Stock Market Watch

Fuel Hedging Charges Hurt Southwest’s Q3 Results (LUV)

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Southwest AirlinesSouthwest Airlines Co. (NYSE: LUV) reported a loss for the third quarter as fuel hedging charges hurt the airline’s financial results for the quarter. The loss is in the third quarter is the first quarterly loss for Southwest in two years.

However, the airline’s fare rose and planes were full in the third quarter, indicating that air travel has not been impacted by the global economic uncertainty. Southwest also said that its bookings have remained strong coming into October and that revenue per passenger is expected to rise in the fourth quarter.


The bullish projections lifted Southwest shares in trading today. At last check, Southwest shares were trading 4.13% higher at $9.07.

Southwest reported a loss of $140 million, or $0.18 per share for the third quarter of 2011, compared with a profit of $205 million, or $0.27 per share reported for the same period in the previous year. Third-quarter loss included $262 million in special items, mainly related to fuel hedges that dropped in value. Excluding one-time items, the company’s earnings for the third quarter of 2011 were $122 million, or $0.15 per share, above analysts’ estimate of $0.14 per share.

Southwest, which acquired AirTran earlier this year, reported a 35% increase in its third-quarter revenue to $4.31 billion. The company’s third-quarter revenue also beat analysts’ estimate. The airline’s average fare increased 7.4% to $142.31 in the third quarter. However, the increase in average fare did not have any negative impact as the airline managed to pack more passengers into its planes.

Southwest’s performance in the third quarter is significantly better that American Airlines’ parent AMR Corp. (NYSE: AMR). On Wednesday, AMR had reported a loss of $162 million for the third quarter. Investors are now awaiting results from other major U.S. airlines; United Continental Holdings Inc. (NYSE: UAL) and Delta Air Lines Inc. (NYSE: DAL) Both report their quarterly results next week.

 

edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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