Southwest Airlines Reports $56 Million Fourth Quarter Loss

Southwest Airlines reported a $56 million net loss for the fourth quarter, its second quarterly loss in row. That was due in part to special charges of $117 million associated with its fuel hedge fund, which saw its value fall.

Without those charges Southwest would have had a net income of $61 million, or $0.08 per diluted share, compared to $87 million, or $0.12 per diluted share, in the fourth quarter of 2007. Southwest CEO Gary Kelly said that a rapid collapse in fuel prices caused Southwest to reduce its net fuel hedge position to approximately 10 percent of its estimated fuel gallons in each year from 2009 through 2013.

He said that the airline produced record fourth quarter 2008 operating revenues, up almost 10 percent, or 8.8 percent per available seat mile, despite the deep recession. Kelly said that the airline was pleased with its holiday performance, which was up year-over-year approximately 7 percent for November/December 2008.

He said that based on booking and revenue trends thus far, Southwest expects a similar growth rate for the month of January, but is seeing notable softness in post-January bookings. Southwest will decrease its capacity by 4 percent this year and will curtail fleet expansion plans.