To no one's surprise, Southwest Airlines reported its 64th consecutive profitable quarter today. Read the news story by the AP here. Wall Street analysts who follow the industry are concerned that what's now the largest U.S. airline in passengers flown is facing cost pressures, from fuel and labor, at a time when the economy is sluggish and customers are resisting higher fares. Some analysts are downright unhappy and downgrading its stock, The runup in fares that many business travelers experienced in early 2006 ran into resistance in the second half of the year, and that resistance continued into the first quarter..Lousy weather in the Northeast and Midwest didn't help either.
More interesting, and pertinent to the lives of frequent travelers, was what Southwest CEO Gary Kelly said during a question-and-answer session with the analysts and reporters. He's also concerned about costs. But he's confident Southwest will find ways -- as it has for its 36 years in business -- to get more productivity out of employees while still keeping customers happy. The airline is considering adding wireless internet acess to its planes, along with some type of entertainment system, but not for a couple of years probably. As you may have heard, it's also studying whether to offer reserved seats, a radical departure from its unreserved practice now, and is looking at international service (think Mexico or Canada). "We have an array of things that aren't ready for prime time," Kelly said.
But Kelly indicated that Southwest isn't thinking of charging for services such as talking to a live human being on the phone, checking bags or otherwise nickel-and-dimeing customers, What he's most determined to do is continue to be different than other airlines. Southwest will still have its own style of service, and it will continue to focus on keeping fares low and service frequent on the routes heavily used by business travelers. Despite last year's fare increases, and the nasty weather that spoiled some vacations this year, "those Road Warriors just seem to plow on through," Kely said.
You can hear replays of Southwest's, American's and Continental's earnings conference call on their Website (links in the right-hand column of this homepage), as you can with most carriers these days, on a quarterly basis.
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