Southwest Airlines 1998 Annual Report Download - page 25

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25
SOUTHWEST AIRLINES CO. ¤ SIX STORIES OF FREEDOM
Southwest Airlines Co.
1998 Annual Report
Financial Review
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
YEAR IN REVIEW
In 1998, Southwest posted a record annual profit for the seventh consecutive year
and a profit for the 26th consecutive year. The Company also posted record operating
revenues; record operating income; the highest net profit margin since 1981 of 10.4
percent; and the highest operating profit margin since 1981 of 16.4 percent. The
Company experienced strong revenue growth, low unit costs, and continued strong
demand for our product.
At the end of 1998, Southwest served 52 cities in 26 states. We added service to
Manchester, New Hampshire, in June 1998 and have been very pleased with the
results. We have plans to add new service to Islip, New York, on Long Island in March
1999 and will begin serving at least one other new city in 1999. With the net addition of
at least 28 aircraft in 1999 (32 new Boeing 737-700s, two used -300s, and the
retirement of six older -200s), we will also continue to add additional flights to cities we
already serve. We are actively pursuing the acquisition of additional used 737-300s
that would add to our 1999 expansion efforts.
During 1998, Boeing experienced production delays related to the 737 production
line. These production delays, for the most part, have been remedied by Boeing and we
currently do not anticipate any significant delays in 1999.