Southwest Airlines Co made a decent profit and left behind its competitor Continental. Continental on the other hand reported to have made the biggest loss during the same period.
The first quarter figures are however always uncertain as they fall between summer and winter holidays. The next quarter will see a rise in the air ticket sales as people would go on vacations. The condition is expected to be better in the next quarter.
Southwest CEO said that their June and May bookings have already started and the booking figures look promising. They do not have separate seating for the business class yet they claim most of their customers are business travelers.
Southwest carries the maximum number of U.S. passengers than any other airline. Its first quarter revenue jumped to 11.6% when compared to previous year. The total profit though was just $11 million due to the rising fuel prices.
Oil prices were floating around $83 a barrel on Thursday after a long climb that began in December 2008. The company is worried about the skyrocketing fuel prices.
Southwest further expects its total fuel-related spending to rise by 3% to 5% in the second quarter when compared to the first quarter. This would put a lot of pressure on the air fares and discounts. The airline has also reduced the number of employees per flight by 3% and has no hiring plans for this year.
Continental Airlines Inc however lost $146 million in the first quarter a loss bigger than expected. Delta Air Lines Inc. lost $256 million, while American Airlines parent AMR Corp. lost $505 million.
Rising fuel prices was the main reason for the declining profits as most of the money was spent on fuel alone as price of a gallon of jet fuel jumped up by 17%.
Continental on the other hand is planning to merge with United Airlines, the third-largest U.S. carrier and create world’s largest airline.
The competition is already tough and the fuel prices are further making the condition worse. The trick now lies in balancing the fuel spending and air ticket prices.
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