Earnings for Southwest Exceed Wall Street Expectations

Southwest Airlines earned more during the first quarter than what analysts from Wall Street had estimated, but officials from the airline said the federal budget cuts could hurt revenue for the airline going forward. An airfare increase helped the airline, as its one-way fares are now averaging over $150 dollars, which is a 4% increase from last year.

Southwest also released details about is operation in Atlanta, where it is currently competing against Delta Airlines. Prior to acquiring AirTran Airways in 2011, Southwest did not use Atlanta to fly into. The Hartsfield Jackson Airport is the world’s busiest and AirTran uses it as its hub.

Starting this fall, Southwest will convert its Atlanta operation to point-to-point. That means it will serve passengers going to and from Atlanta. Southwest officials said the Atlanta change will make if more efficient and will boost its traffic in the region.

Southwest’s net income during the first three months of 2013 was $59 million, which represented a drop over more than 40% from the $98 million recorded during the same period a year ago. The first quarter per share income was 8 cents, while its was 13 cents a year ago.

Without using special items, earnings at Southwest were just 7 cents a share, which was higher than the 2 cents a share that was predicted by Wall Street analysts. It also reversed a loss from the same period last year of 2 cents a share.

Total revenue for the first three months of 2013 reached $4.09 billion or 2% higher than the first three months of 2012. Southwest shares were little changed on Thursday closing at $13.42 after going up following the announcement of earnings.

Officials at Southwest continue to be cautiously optimistic even though the federal budget cuts are expected to have an effective in April and May in earnings for the airline.

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