Southwest Airlines pulled back on growth plans and posted lower quarterly earnings on Thursday as a weak US economy and record fuel costs took a toll on the leading US discount carrier. First-quarter net profit fell to $34 million from $93 million in the same period last year.
Excluding one-time items, profit was $43 million, compared with $33 million in the year-ago period. Revenue rose 15 percent to $2.53 billion. Southwest said it would grow its fleet in 2009 by no more than 14 737-700 aircraft, half its previous plan. US airlines are suffering under high fuel prices and a weakening domestic economy. Although Southwest has a history of successfully hedging against higher fuel costs, it said on Thursday it was concerned about rising energy costs. "We cannot ignore the threat of volatile and unprecedented jet fuel prices," Chief Executive Gary Kelly said in a statement. "We will continue to take steps to restore our profit margins, including an ongoing rigorous review of our flight schedule to eliminate nonproductive flying," Kelly said. Tough market conditions helped prompt a proposed merger between Delta Airlines and Northwest Airlines and could spur a wave of consolidation amid fears of falling travel demand. Kelly said on CNBC television that his company needs to adjust to the changing environment and that Southwest "can't just stand still." However, he added, "I don't think that means we have to look for a merger partner," saying the best course of action for Southwest may be to do nothing amid the consolidation.
