DAVID KOENIG, AP Airlines Writer
DALLAS (AP) — Southwest Airlines Co. made more money in the fourth quarter thanks to a lower fuel bill and higher average fares.
The company said Thursday that net income for the final three months of 2013 totaled $212 million, up from $78 million a year earlier.
Southwest’s results topped Wall Street expectations, and it forecast improved first-quarter revenue compared with a year ago. Shares rose in premarket trading.
The Dallas-based airline burned about the same amount of fuel but paid 30 cents less per gallon than a year ago. That helped it save $138 million, or 9.2 percent, on fuel.
Meanwhile, the average fare on Southwest rose $8, or 5.4 percent, to $156.05 each way.
CEO Gary Kelly said traffic suffered early in the fourth quarter because of a partial shutdown of the federal government, but traffic and revenue rebounded in November and December, a trend that has carried over into January. Travel bookings are strong for the rest of the first quarter, he said.
Southwest predicted that revenue for every seat flown one mile — a key measure in the airline business called unit revenue — will be higher in the first quarter than it was in the same period last year.
Southwest, which also operates AirTran Airways, earned 30 cents per share in the fourth quarter, compared with 11 cents per share a year earlier.
Excluding special items, Southwest said it earned 33 cents per share. Analysts were expecting 29 cents per share, according to a FactSet survey. Revenue rose 6.1 percent to $4.43 billion, above analysts’ forecast of $4.39 billion.
While Southwest caught a break on fuel prices, labor costs rose 7.3 percent.
Southwest shares were up 43 cents, or 2 percent, to $22.20 in trading ahead of Thursday’s opening bell. Through Wednesday, the shares had gained 90 percent in the past year. Investors have been drawn to airline stocks as the carriers have improved their financial performance, helped by stable fuel prices and nearly-full airplanes.
This is a key year at Southwest, which carries more passengers within the U.S. than any airline, but is smaller than American, United and Delta because it doesn’t fly internationally. That is expected to change in 2014, as Southwest absorbs routes to the Caribbean and Latin America now operated by its AirTran affiliate.
Also, Southwest is poised to grow at its Dallas home this fall when a federal law limiting flights from Dallas Love Field expires. That law, passed in the 1970s, was designed to kill Southwest and protect nearby Dallas-Fort Worth International Airport, a hub for American Airlines. Finally, Southwest looks to complete the job of folding AirTran into the Southwest brand.