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Southwest Airlines (LUV) Q4 Profit Tops Street By A Penny

 January 24, 2013 09:21 AM

(By Mani) Southwest Airlines Co. (NYSE: LUV) reported better-than-expected fourth-quarter profit on strong yields, high load factors, and improved freight revenue performance.

For the fourth quarter 2012, net income was $78 million, or 11 cents a share, which included $13 million of favorable special items. This compared to net income of $152 million, or 20 cents a share, in the fourth quarter 2011, which included $86 million of favorable special items.

Excluding special items, net income was $65 million, or 9 cents a share, which exceeded the Thomson Reuters consensus estimate of 8 cents a share.

The company's total operating revenues in fourth quarter 2012 increased 1.6 percent to $4.2 billion, from $4.1 billion a year-ago. Wall Street expected revenue of $4.21 billion.

Passenger revenue rose 1.9 percent to $3.93 billion and freight revenue advanced 17 percent to $42 million. Operating unit revenues increased 1.9 percent. Based on current bookings and revenue trends, the company expects a solid year-over-year increase in its first quarter 2013 unit revenues.

Total fourth quarter 2012 operating expenses were $4.1 billion, compared to $4.0 billion in fourth quarter 2011. Excluding special items in both periods, fourth quarter 2012 operating expenses increased 2.4 percent from fourth quarter 2011.

Quarterly economic fuel costs, including fuel taxes, were $3.32 per gallon, compared to $3.29 per gallon in fourth quarter 2011. Based on market prices as of January 18, 2013, the airline expects first quarter 2013 economic fuel costs, including fuel taxes, to be approximately $3.30 per gallon.

First quarter 2013 premium costs related to fuel derivative contracts, recorded in Other (gains) losses, are currently estimated to be approximately $5 million, compared to premium costs of $6 million in first quarter 2012. As of Jan. 18, 2013, the fair market value of the Company's hedge portfolio through 2017 was a net asset of approximately $216 million, compared to a net asset of approximately $220 million at Dec. 31, 2012.

Shares closed previous trading session at $11.36.

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