Pelican

Southwest Airlines Eyes International Routes, Profit Surges - WSJ

I'm not subscribed to the WSJ so couldn't read the entire article. Can someone shed light? Is this more Caribbean or something else?

80ktsClamp

It's just replacing more routes that have currently have an "a" on the tail with a beach ball painted airplane.

jetliner1526

A Southwest Airlines Co. Boeing Co. 737 airplane departs Ronald Reagan National Airport in Washington, D.C. Bloomberg

Southwest Airlines Co. LUV -0.66% announced plans Thursday to resume expansion next year, and it has a shortlist of 50 potential international destinations in addition to new domestic routes.

The airline dialed back growth over the past two years as it focused on boosting its lagging financial performance and trimming costs to compete with rival discount carriers and the three network airlines.

Gary Kelly, chief executive, said Southwest expected a "measured" growth in flying in 2015, with larger aircraft boosting available seat miles, an industry measure of capacity, by 2% to 3% next year.

His comments came after Southwest reported record second-quarter profit that boosted its return on invested capital to 17.1%. Southwest had stalled expansion until it reached its long-term goal for returns of at least 15%.

Southwest recently launched its first international flights with its own aircraft, offering service to three Caribbean destinations from three of its U.S. gateway cities.

The Dallas airline inherited some Caribbean flights in its 2011 AirTran acquisition and is switching them over to its own planes and crews. It will be starting new flights from Orlando and Atlanta as well.

Mr. Kelly said international flying was only 1% of its network, and he had previously identified adding routes to Mexico, the Caribbean and northern South America, as well as to Hawaii and Alaska.

"Hawaii is one of 50 potential destinations," he said, adding on a post-earnings call that it "wouldn't take years" to start flights to the islands.

Southwest will also add new routes from its base at Dallas Love Field Airport later this year, when long-standing restrictions are lifted, as well as from Reagan National near Washington, D.C.

"It's a very small part of our route system, and it's going to be small for a long time," he said of international flights.

His comments came as Southwest reported net profit of $465 million for the quarter, compared with $224 million a year earlier, with per-share earnings rising to 67 cents from 31 cents. Its passenger revenue per available seat mile, a key performance metric for the airline industry, rose 9% in the latest quarter and is forecast to rise 3% in July.

Southwest Airlines also pays a dividend and buys back its stock. In May, it raised its dividend to four cents a share from a penny, and increased its share-buyback authorization to $1.5 billion from $1 billion.

Write to Doug Cameron at [email protected] and Erin McCarthy at [email protected]

gloopy

I love how every wanna be thinks Hawaii is some treasure trove of undiscovered profits. Its mostly an ultra low yielding, highly saturated market where big networks seat dump to bleed out mileage programs and a few niche carriers carve out some sustenance. That everyone thinks its part of their manifest destiny is laughable.

forgot to bid

Succinct and fun to read.

tsquare

+717.............

captjns

Well the good news is that most Caribbean islands have only one airport.

Timbo

No Domino's in the Caribb...so are they going to bring the pizza with them?

With no ovens, how will they keep it warm??

full of luv

After living in Hawaii for nearly a decade, couldn't agree more. If DAL and HAL were to ever merge, it would be for the cheap metal only. No doubt DAL would immediately redeploy half their fleet to markets that actually sell first class seats. Hawaii is predominately a vacation and government travel, neither of which pay very high yields. During the dark years a few years back, you could often find HNL to LAX for $200 on UAL.....

Smokey23

I love how every double-breasted wannabee airline analyst around here reads exactly what they want to read into otherwise innocuous quotes about an airline they cannot stand:

"Mr. Kelly said international flying was only 1% of its network, and he had previously identified adding routes to Mexico, the Caribbean and northern South America, as well as to Hawaii and Alaska.

"Hawaii is one of 50 potential destinations," he said, adding on a post-earnings call that it "wouldn't take years" to start flights to the islands."

I didn't see much "treasure trove of profits" in that statement. If SWA does eventually fly to HI it will be for the same reasons as Delta: it fills out the route map nicely and makes the airline more attractive overall to the traveling public.