Southwest Airlines released its quarterly results this week and impressed by sharing that it has actually achieved record results over the last quarter.
The U.S carrier almost exclusively can thank the positive surge in passenger traffic this year for this achievement.
In its quarterly results released on 28 July, Southwest Airlines revealed a stellar second quarter which saw the low-cost carrier exceed its quarterly profit record.
Bob Jordan, Chief Executive Officer at Southwest, echoed the carrier’s pride in such a positive quarter despite the rise in jet fuel and staffing shortages across the industry:
“We are very pleased to report all-time record quarterly revenues and net income, excluding special items, representing a significant milestone in our pandemic recovery. Travel demand surged in second quarter, and thus far, strong demand trends continue in third quarter 2022.”
Why was Southwest able to dodge the consequences of rising jet fuel costs? Jordan explained that the carrier’s fuel hedge continues to offer “significant protection” against higher jet fuel prices. Southwest’s fuel hedges are currently valued at $1 billion and are almost certainly helping the airline run smoothly (and cheaper).
Southwest did also note that its strong results over this recent quarter were “primarily due to a surge in leisure demand, especially in June, which resulted in strong passenger bookings, yields, and load factors.”
The Texas-based carrier reported a record quarterly net income, excluding special items, of $825 million. Its liquidity stands at $17.4 million, a very comfortable distance from its $10.5 million outstanding debts.
Elsewhere, Southwest has done well to maintain a completion factor of over 99% of its flights regardless of the intense disruption that has been affecting the air travel industry across the globe. Likely in lieu of this, Southwest’s loyalty programme revenue also hit a quarterly record.
The future is bright
The world’s largest low-cost carrier is understandably very optimistic about its performance over the remainder of 2022. They expect to see a profit for the next two quarters.
CEO Bob Jordan said,
“As anticipated, we experienced inflationary pressures and headwinds from operating at suboptimal productivity levels in second quarter, which we expect will continue in second half 2022; however, our fuel hedge continues to provide significant protection against higher jet fuel prices. Barring significant unforeseen events and based on current trends, we expect to be solidly profitable for the remaining two quarters of this year, and for full year 2022.”
This comes as the major U.S carrier also announced that its customer flight credits will not expire, stating: “we are famous for offering industry-leading flexibility for customers, and it is a key differentiator of our brand.”
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