Southwest Airlines passenger revenue increased 0.6 percent
year over year to $4.4 billion in the first quarter. The carrier reported a quarterly record for the number of
passengers, and traffic increased 3.3 percent year over year. CEO and chairman
Gary Kelly noted a "challenging fare environment," with the average
fare down 2.6 percent to $149.78.
Southwest increased capacity 4.1 percent year over year in
the quarter, and its load factor declined 0.6 percentage points to 79.9
percent.
Net income for the first quarter was $351 million, down from
$513 million in the first quarter of 2016. Some of that stemmed from higher
fuel costs and labor costs under new union contracts, CFO and EVP Tammy Romo
said, but Southwest also had costs related to its switchover to its Amadeus-based reservation system, which will happen within the next two
weeks. That includes costs related both to the technology itself and extra
labor costs and training in anticipation of the switchover, Kelly said.
Kelly also said the carrier planned to end the practice of
overbooking flights, possibly sometime during the second quarter. Romo said
ending overbooking would have a "fairly small" economic impact. While
the recent attention to passenger bumping following United Airlines' forcible
removal of a passenger from a flight earlier this month helped spur the
decision, Southwest already had been considering it, Kelly said. "It was not on my list this month to work on, but it is
something we have had on our list for the last couple of years," he said.
"This put the question under a bright light, and hey, why not do it
now?"
The policy still would not preclude oversold
situations like when an aircraft must be swapped out for one with fewer
seats or for unexpected crew movement needs, he said.