Southwest Airlines 1996 Annual Report Download - page 23

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23
RESULTS OF OPERATIONS
1996 COMPARED WITH 1995
The Company’s consolidated net income for 1996 was $207.3 million ($1.37 per share),
as compared to the corresponding 1995 amount of $182.6 million ($1.23 per share), an increase
of 13.5 percent.
OPERATING REVENUES
Consolidated operating revenues increased by 18.6 percent in 1996 to $3,406.2 million,
compared to $2,872.8 million for 1995. This increase in 1996 operating revenues was derived
primarily from an 18.4 percent increase in passenger revenues. Revenue passenger miles (RPMs)
increased 16.1 percent in 1996, compared to a 12.6 percent increase in available seat miles
(ASMs), resulting in an increase in load factor from 64.5 percent in 1995 to 66.5 percent in
1996. The 1996 ASM growth resulted from the net addition of 19 aircraft during the year: 22
additions and three retirements.
In December 1995, because of the impasse in the federal budget, Congress allowed the
ten percent federal ticket tax to lapse. This benefited Southwest’s revenues until late August
when Congress reimposed the tax through December 31, 1996. The reimposition of the ticket tax
negatively impacted revenues in third and fourth quarters 1996 as compared to revenue trends in
the first half of 1996.
In celebration of the Company’s 25th Anniversary, Southwest launched a fare sale in July
for travel between August 19 and October 31, 1996. The sale was extremely popular and
resulted in record advance bookings, with more than four and a half million seats sold. Although
July and early August load factors and revenues were negatively impacted by the telephone line
congestion experienced during the sale, revenues for September and October 1996 were
positively impacted with very heavy passenger volumes.
Freight revenues in 1996 were $80.0 million, compared to $65.8 million in 1995. The
21.5 percent increase in freight revenues exceeded the 12.6 percent increase in ASMs for the
same period primarily due to increased air freight volumes and United States mail services,
primarily resulting from the development of new markets added in 1995 and early 1996.
Other revenues increased by 23.3 percent in 1996 to $56.9 million, compared to $46.2
million in 1995. This increase is primarily due to increased charter revenue.