Southwest 2Q Profit up, Sales Rise 11 Percent

July 25, 2008 8:55:39 AM PDT
Southwest Airlines' streak of 69 straight profitable quarters remains intact. But it is signaling that higher fares are in the offing for its passengers. The low-fare pioneer yesterday reported a bigger second-quarter profit than Wall Street expected, thanks a strategy that keeps its fuel costs relatively low. It turned a sizable profit, while other carriers see losses mount.

After growing earlier this year, Southwest has stopped adding flights, and its CEO says the company might continue the freeze right into 2009.

Dallas-based Southwest Airlines said it earned $321 million, or 44 cents per share. That's up 15 percent from a year ago.

Revenue rose 11 percent as Southwest raised fares and carried more passengers.

Chairman and CEO Gary Kelly says the company must raise fares "substantially," and it could gain pricing power after Labor Day, when other airlines plan to cut capacity 15 percent where they compete head-to-head with Southwest.