Southwest Airlines reported strong business travel demand in
the fourth quarter as it topped quarterly records in both passenger revenue and
load factor.
"Travel demand and close-in yields picked up following
the election," Southwest CFO and EVP Tammy Romo said on the carrier's
earnings call. "Business travel leading up to the December holiday was
better than expected earlier in the quarter … and thus far, the fare
environment has held in January."
Southwest's passenger revenue totaled $4.6 billion in the
quarter, and total operating revenue rose 5 percent year over year. The carrier
boosted capacity 5 percent year over year, and traffic increased 5.5 percent,
pushing load factor up 0.3 percentage points to 84.4 percent.
The average fare declined 3.7 percent year over year to
$144.43, and unit revenue also declined, but CEO Gary Kelly said that is
turning around. "After two years of sequential declines, it feels like
we're bottoming, and we've outperformed the industry since 2014," he said.
In December, Southwest began selling domestic itineraries on
its new
Amadeus platform in anticipation of a full switchover on May 9, and Kelly
said the deployment was "virtually flawless." The system brings
enhanced capabilities for selling ancillary services, but Kelly said Southwest
has no intention of introducing any sort of basic
economy fare, as the Big Three U.S. carriers have. "We have a huge
value in offering all customers a great product, and if we were to undertake a
basic fare product, the only thing we could do is take away from it,"
Kelly said. "I'm not saying that forevermore Southwest will not undertake
something like that, but it would take a darn good reason."
Southwest
reported a net income of $2.2 billion for the full year 2016, up 2.9 percent
compared with 2015.