|
NEW YORK (CNN/Money) -
Southwest Airlines' profits jumped 41 percent in the second quarter despite a sharp rise in fuel costs -- a surprisingly strong performance that sparked a rally in the low-fare carrier's stock.
The nation's most profitable airline again benefited from shrewd management of its purchases of jet fuel. Southwest (Research) shares jumped about 4 percent in heavy New York Stock Exchange trading.
The company said it earned $159 million, or 20 cents a share, in the quarter, up from $113 million, or 14 cents a share, a year earlier, topping the average analyst forecast of 18 cents a share.
Continental Airlines (Research) is the only other carrier among the nation's eight largest carriers expected to post a profit for the quarter.
Revenue at Dallas-based Southwest jumped 13 percent to $1.9 billion, essentially in line with forecasts.
"This is now the 57th quarter of profitability since 1991, a pretty strong story," Rick Applegate, president of First Commonwealth Financial Advisors, told Reuters. "They are doing what they can do keep their unit costs down as much as possible with careful growth."
The amount of miles flown by paying passengers increased 8 percent, while the average amount paid per mile by those passengers was up nearly 5 percent as the low-fare leader instituted what it called modest price increases.
The airline saw what it paid for a gallon of fuel rise 25 percent, and overall fuel costs -- the second-biggest expense for an airline after labor costs -- jumped more than a third to $330 million.
But still, Southwest has long-term fuel contracts that gives it significant price advantages over other airlines.
The company will be able to buy about 85 percent of its second-half fuel needs at the equivalent of $26 a barrel, less than half of current spot market prices.
Those fuel purchases have made Southwest a favorite with investors. It is the most valuable U.S. airline even though it ranks only No. 6 by revenue passenger miles, the industry's usual yardstick.
For more earnings news, click here.
-- from staff and wire reports
|
