Southwest Airlines 1996 Annual Report Download - page 26

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26
OTHER
“Other expenses (income)” included interest expense, capitalized interest, interest
income, and nonoperating gains and losses. Capitalized interest decreased $9.1 million in 1996 as
a result of certain amendments to aircraft purchase contracts during third quarter 1995 that
affected the timing of payments. Interest income for 1996 increased $5.7 million primarily due to
higher invested cash balances.
INCOME TAXES
The provision for income taxes as a percentage of income before taxes decreased in 1996
to 39.3 percent from 40.2 percent in 1995. The decrease was primarily the result of lower
effective state tax rates.
1995 COMPARED WITH 1994
The Company’s consolidated net income for 1995 was $182.6 million ($1.23 per share),
as compared to the corresponding 1994 amount of $179.3 million ($1.22 per share), an increase
of 1.8 percent.
OPERATING REVENUES
Consolidated operating revenues increased by 10.8 percent in 1995 to $2,872.8 million,
compared to $2,591.9 million for 1994. This increase in 1995 operating revenues was derived
from a 10.5 percent increase in passenger revenues. RPMs increased 7.9 percent in 1995,
compared to a 12.6 percent increase in ASMs, resulting in a decrease in load factor from 67.3
percent in 1994 to 64.5 percent in 1995. The 1995 ASM growth resulted from the addition of 25
aircraft during the year.
Freight revenues in 1995 were $65.8 million, compared to $54.4 million in 1994. The
21.0 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 throughout 1994 and 1995.
OPERATING EXPENSES
Consolidated operating expenses for 1995 were $2,559.2 million, compared to $2,275.2
million in 1994, an increase of 12.5 percent, compared to the 12.6 percent increase in ASMs. For
the second consecutive year, operating expenses on a per-ASM basis decreased year-over-year,
down 0.1 percent in 1995.