Southwest Airlines Co.'s (LUV) second-quarter earnings jumped 44% as results benefited from the acquisition of low-cost rival AirTran and higher traffic, although fuel costs jumped sharply higher.
Many airlines reported weaker bottom-line results for the latest quarter due to a double-digit increase in fuel costs. Traffic has broadly improved, however, as air-travel demand continues to climb. Southwest has reported a streak of strong monthly traffic increases.
The latest results included Southwest's purchase of AirTran, a deal that gives the carrier access to Atlanta--AirTran's major operating hub and the one major U.S. city Southwest didn't already serve. It also gives Southwest access to Mexican and Caribbean destinations.
Southwest reported earnings of $161 million, or 21 cents a share, up from $112 million, or 15 cents a share, a year earlier. Excluding fuel hedging and other impacts, adjusted earnings slid to 15 cents from 29 cents. Revenue jumped 31% to $4.14 billion.
Analysts surveyed by Thomson Reuters expected a per-share profit of 20 cents on revenue of $4.16 billion.
Traffic jumped 28% as capacity increased 23%. Load factor, or the percentage of available seats filled, grew to 82.3% from 79.3%. Passenger revenue per available seat mile, an important measure of revenue for airlines, grew 4.1%.
Per-gallon fuel costs were 38% higher than a year ago.
Shares closed at $9.65 Wednesday and were inactive premarket.
-By John Kell, Dow Jones Newswires; 212-416-2480; firstname.lastname@example.org