Southwest Posts $91 Million Loss, Sets Buyout Plans

Southwest Airlines reported a loss of $91 million for the first quarter, compared to net income of $34 million for the first quarter of 2008. CEO Gary Kelly said the results were disappointing but not surprising, due to the economy. He said that a rapid weakening in passenger demand during first quarter, particularly among business travelers, led to the first quarter net loss.

Kelly said that Southwest had significantly reduced planned capital spending by approximately $1.4 billion for 2009 and 2010 combined by deferring aircraft deliveries, accelerating aircraft retirements, and suspending plans to grow capacity and added that recent promotions and discounting activities have been successful in stimulating traffic, leading to record first quarter load factors.

Southwest reported operating income, excluding special items, of $31 million, a net loss, excluding special items, of $20 million, a net loss per diluted share, excluding special items, of $0.03, cash flow from operations of $286 million and raised $173 million through aircraft financing.

Total operating revenues for first quarter 2009 decreased 6.8 percent to $2.4 billion, compared to $2.5 billion for first quarter 2008. Total first quarter 2009 operating expenses were $2.4 billion, in line with first quarter 2008. Kelly said the airline will reduce staffing via a voluntary early-out program to help mitigate cost pressures next year.

It told employees it would offer voluntary buyouts and froze hiring and top pay for top officers and senior management. Southwest plans to cut capital spending through 2010 by $1.4 billion by delaying aircraft deliveries, retiring some planes sooner than scheduled and suspending plans to increase capacity.