Southwest profit jumps 7.2% as unit revenues rise
Oct 24 (Reuters) - Southwest Airlines Co LUV.N reported a 7.2% rise in third-quarter profit on Thursday, as strong travel demand and higher fares offset the hit from flight cancellations due to the grounding of its Boeing 737 MAX jets.
The budget-friendly U.S. airline, which only flies 737 planes and has the world's largest MAX fleet, said it took a $210 million hit to operating income in the quarter from the ongoing grounding.
Southwest said last week it was postponing the return of the 737 MAX jets to its flight schedule until Feb. 8.
Unit revenue in the quarter ended Sept. 30, however, grew 4.2%, while average fares rose 1.7%, as the company successfully controlled costs from the MAX grounding.
"We continue to control costs despite significant year-over-year unit cost pressures resulting from the MAX," Chief Executive Officer Gary C. Kelly said.
"Based on these trends (in customer demand and revenue) and current bookings, we are expecting another positive year-over-year unit revenue performance in fourth quarter 2019."
The company also said it would save some money on the delay in deliveries of more MAX jets, cutting its projected 2019 capital expenditure to between $1.1 billion and $1.2 billion from a prior range of $1.2 billion to $1.3 billion.
That was based on the assumption that Boeing will meet its target of gaining regulatory approval for a MAX return to service in the fourth quarter.
Dallas, Texas-based Southwest said net income rose to $659 million, or $1.23 per share from $615 million, or $1.08 per share, a year earlier.
Total operating revenue rose 1.1% to $5.64 billion.
(Reporting by Sanjana Shivdas in Bengaluru; editing by Shinjini Ganguli)
((SanjanaSitara.Shivdas@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 1642; Twitter: @SanjanaShivdas;))
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