Southwest Reports Strong Q3 Profit Increase

Southwest Airlines reported third-quarter net profit 77 percent up on the same period a year ago, and forecast a unit revenue rise in the fourth quarter.

The US budget carrier earned USD$584 million in the third quarter, up from USD329 million in the year prior.

Southwest forecast that unit revenue would rise about 1 percent in the fourth quarter compared to the previous year.

It attributed the increase to "favourable booking" trends thus far in October and to revenue it has generated from an amended marketing agreement for credit cards with Chase Bank.

The forecast unit revenue increase breaks a two-quarter-long decline in that measure as Southwest added capacity and competed for share in hotly contested US cities such as Dallas - its headquarters - pressuring ticket prices.

Southwest reported that its capacity plans remain unchanged, expecting to increase available seat miles by about 7 percent in 2015 and about 5 to 6 percent in 2016, each compared to a year earlier.

It said it expects unit costs in the fourth quarter, excluding fuel, profit-sharing and other expenses, will be "comparable" with the year prior, including the impact from a tentative contract it has reached with its pilots.

The airline said it returned USD$549 million to shareholders through dividends and stock buybacks in the third quarter, and USD$1.4 billion during the first nine months of 2015.

Operating margin in the quarter was 20.3 percent, helped by lower fuel prices.