Southwest Airlines 1996 Annual Report Download - page 24

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24
OPERATING EXPENSES
Consolidated operating expenses for 1996 were $3,055.3 million, compared to $2,559.2
million in 1995, an increase of 19.4 percent, compared to the 12.6 percent increase in capacity.
Operating expenses per ASM increased 6.1 percent in 1996 compared to 1995, primarily due to
significantly higher jet fuel prices along with the 4.3 cent per gallon federal jet fuel tax
implemented October 1, 1995. Excluding jet fuel costs and related taxes, operating expenses per
ASM were up 3.1 percent in 1996 compared to 1995.
Unit costs are expected to increase in first quarter 1997 versus first quarter 1996 due to
higher jet fuel prices. (The immediately preceding sentence is a forward-looking statement which
involves uncertainties that could result in actual results differing materially from expected results.
Such uncertainties include, but may not be limited to, the largely unpredictable levels of fuel
prices.)
Operating expenses per ASM for 1996 and 1995 were as follows:
OPERATING EXPENSES PER ASM
1996 1995
INCREASE
(DECREASE)
PERCENT
CHANGE
Salaries, wages, and benefits.................... 2.22¢ 2.17¢ .05¢ 2.3%
Employee profitsharing and savings plans
.23 .23 - -
Fuel and oil.............................................. 1.19 1.01 .18 17.8
Maintenance materials and repairs........... .62 .60 .02 3.3
Agency commissions................................ .35 .34 .01 2.9
Aircraft rentals ........................................ .47 .47 - -
Landing fees and other rentals ................. .46 .44 .02 4.5
Depreciation ............................................ .45 .43 .02 4.7
Other ....................................................... 1.51 1.38 .13 9.4
Total........................................................ 7.50¢ 7.07¢ .43¢ 6.1%
Salaries, wages, and benefits per ASM increased 2.3 percent in 1996. This increase
resulted primarily from a 16.2 percent increase in 1996 average headcount, which outpaced the
1996 capacity (ASM) increase of 12.6 percent, and offset a 0.8 percent decrease in average
salary and benefits cost per Employee. The 16.2 percent increase in average headcount was
primarily the result of a 24.3 percent increase in Reservations Sales Agents in 1996. Excluding
Reservations Sales Agents, total average headcount increased 13.1 percent, in line with capacity.