Dallas-based Southwest Airlines reported a net income of $270 million off record operating revenue of $8.4 billion, a company record and up 21.2% from the previous year.
Tom Fox/The Dallas Morning News
Southwest Airlines CEO Bob Jordan said this week that demand remains strong amid higher airfares, emphasizing that the Dallas-based airline’s products continue to win customers over.
“Throughout the quarter, broad-based demand strength was evident across all geographies and products, including business, leisure, loyalty and co-brand [credit card],” Jordan said during the airline’s third-quarter earnings call on Thursday.
Jordan’s comments came after Southwest, Love Field’s dominant carrier, reported net income of $270 million off of record operating revenue of $8.4 billion, a company record and a figure that was up 21.2% from the previous year.
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The strong earnings report came amid soaring fuel costs, which have created an extra expense for several U.S. airlines, including Fort Worth-based American. Southwest’s fuel cost for the third quarter was up $821 million from last year. To compensate for higher fuel costs, airlines have raised bag fees and air fares.
While was strong, Southwest also reported that the number of revenue passengers carried to about 33.47 million people in the third quarter, a 3.2% decrease from the same time period last year. The airline also said its average fare for the third quarter was $231.69, up nearly 27% from the previous year.
Despite the rise in fares Southwest’s load factor, a measure of how full its airplanes are, was 79.8%, the same as last year’s third quarter.
Jordan said during the call that Southwest is “focused on creating value, period.”
Last week, Southwest announced a total overhaul of its popular frequent flyer program Rapid Rewards with the introduction of three newly created tiers that will take effect in January of next year.
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The airline has made sweeping changes to its business model over the past couple years. It started charging for checked bags last year and earlier this year introduced assigned seating and extra legroom seating. The airline is investing in Starlink Wi-Fi to boost in-flight connectivity for customers, saying it expects the service to be installed across its entire fleet by next fall.
Southwest is also diving into the lounge business, announcing last month it will open airport lounges in Honolulu, Austin, Nashville and Baltimore, with more to follow.
The lounges will allow Southwest to increase the value of its co-brand credit cards issued through Chase. Southwest is planning to roll out a new top-tier credit card next year that will give customers access to its lounge network.
But Jordan teased that more changes were on the horizon, announcing Southwest would host what it’s calling a Capital Markets Day in New York City next March.
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“We look forward to sharing our multiyear financial framework, the targets we are managing towards and the actions we are taking to achieve them,” Jordan said. “We will also discuss plans to further strengthen Southwest’s competitive position and unlock additional long term value for employees, customers and shareholders.”
American, the dominant carrier at DFW International Airport, reported record revenue of $16.3 billion on Thursday but suffered an adjusted loss of $182 million.