Southwest Airlines CEO: the worst is not behind us

marketwatch.com ^ | 10/15/09 | Christopher Hinton

[Kartographer]

Despite signs of an improving economy, Southwest Airlines Co. /quotes/comstock/13*!luv/quotes/nls/luv (LUV 9.58, -0.46, -4.61%) Chief Executive Gary Kelly said Thursday that the worst was not yet behind the low-cost carrier because of higher energy prices and the lack of business travel. "But we're going to continue to work vigorously on implementing more new revenue initiatives and of course as always, do all we can to control our cost and look no further than the improvement in our productivity in the third quarter yet again," Kelly said on a post-earnings call. Earlier, Southwest reported a better-than-expected third-quarter profit on an adjusted basis, helped in part by improving revenue performance, the Dallas-based carrier said.

[Kartographer]

If a well run cost efficient company like Southwest is not making money that should tell you a lot about the economy.

[Erik Latranyi]

If a well run cost efficient company like Southwest is not making money that should tell you a lot about the economy.

The two things Southwest cannot control -- demand and fuel prices -- are precisely the things hurting it now.

No company, regardless of how well-managed, can survive without customers and increasing costs.

[OldDeckHand]

I don't know where economists think this upswing in growth is going to come from. Housing prices don't look like they're going to rebound in any significant way, which will foreclose (pardon the pun) consumers from tapping that ATM to buoy consumer spending. So, where's this capital for growth going to come from, especially considering that government is going to be sucking a tremendous amount of liquidity out of the market when the Bush tax-cuts expire? If people have to give more to the government, they have less to invest in the private sector, right?

For employers to start hiring again, they're going to have to see growth in excess of 3%, for at least a couple quarters. I just don't see it. Maybe I'm wrong. But, without a significant return to hiring, what's going to happen to the 10-15% unemployed? That's an awful lot of people not earning, and not spending.

[dools007]

We keep hearing about “signs” of a recovering economy. But I have seen what these “signs” are. Can anybody help me out here?

Looks to me like a Dear Leader propaganda campaign to get people to believe the economy is recovering. In other words, tell the big lie often enough and people will ultimately believe it.

[Justa]

“Southwest reported a better-than-expected third-quarter profit....”

[Darlin']

"No company, regardless of how well-managed, can survive without customers and increasing costs."

I can't tell you how many people I know who have switched from other U.S. carriers to Southwest. Me included. Unlike our other carriers they haven't forgotten who they are or what they are supposed to be. Great restaurants do fine dining, luxury spas do pampering and airliens do transportation. Southwest gets that. They never forget who brought them to the dance. They keep their priorities straight, treat their passengers with respect, get you where you are going safely and on time. At the moment their only legitimate competition is private aircraft.

[Shethink13]

Agree 100%. I fly nothing but Southwest, unless Southwest doesn’t fly to where I’m going. I love the fact that they don’t assign seats, just first come first serve. I can fly Pittsburgh to Chicago for $49, cheaper than the gas it takes to drive there.

[safisoft]

I love the fact that they don’t assign seats, just first come first serve.

Cattle call. I suppose it is so popular that they actually have a new service you can pay for - board before the other sheep.

[Shethink13]

Cattle call. I suppose it is so popular that they actually have a new service you can pay for - board before the other sheep.

Well, yes. Do you have a problem with the free market idea of paying for what you're getting? Should people who fly first class pay the same amount as coach?

I don't have any problem with paying the lowest price possible and making sure I do my online checkin as early as possible so I get a low boarding number, and thus a better shot at my choice of seat. Better than having to split up seats because somebody booked their flight 3 months before me and left only crappy single seats.

Not sure why this seems so undignified to you. Perhaps you have a vested interest in a rival airline?

[safisoft]

Not sure why this seems so undignified to you.

Not at all. Your comment was how great it all was - as if you get MORE than you pay for. My comment simply reflected the truism that you DO get what you pay for. Yes, Southwest is sometimes cheaper. Regardless, you DO get what you pay for. Southwest has a great advantage for those who:

Care only about price
Are not concerned with networks - point-to-point only

BTW, Greyhound sometimes has better prices.

[Shethink13]

Not at all. Your comment was how great it all was - as if you get MORE than you pay for.

I don't have any idea how you went from the fact that I like how Southwest handles it's seating arrangement to thinking I'm getting more than I pay for. I explained to you that I prefer picking my seat when I get there, that's it.

BTW, Greyhound sometimes has better prices.

LOL! Sure, if I have 48 hours of free time to get where I'm going.

So what airline are you connected with that makes you so bitter about the success of Southwest?