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Southwest posts Q3 net loss on special items
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(Photo: Southwest Airlines)
Southwest Airlines posted third quarter 2009 financial results today, reporting a net loss of $16 million, or 2 cents per diluted share, compared to a net loss of $120 million for the same period last year. The company reported a one-time charge of $27 million related to the company's early retirement incentive and a net loss of $12 million relating to non-cash, market-to-market items associated with the company's fuel hedging program. Excluding these special items, the third quarter net income was $23 million or three cents per diluted share, compared with $69 million for the same period in 2008.
The company's early-out program, designed to reduce headcount after capacity reductions earlier in the year was expected as a special charge in the third quarter, and the loss would likely have been larger had not Southwest substantially reduced their fuel hedging portfolio at the end of 2008. It is projected the early-out program will pay dividends in the long term, providing productivity increases for the carrier.
Southwest has introduced multiple revenue initiatives this year, such as charging fees for unaccompanied minors, pets, and priority boarding. The company stands alone among major US airlines by still allowing two free checked bags per ticketed passenger on every flight. Recent outsized gains in traffic during the traditionally slow September month for both Southwest and JetBlue which does not charge for a first checked bag, may show promise that holding out on baggage fees may increase traffic.
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