Southwest Airlines 1996 Annual Report Download - page 4

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To Our Shareholders:
1996 was another excellent year for Southwest Airlines. Our earnings of $207.3 million ($1.37
per share) exceeded the $182.6 million ($1.23 per share) of 1995 by 13.5 percent.
Our net income for the first half of 1996 increased over our net income for the first half of
1995. Our net income for the second half of 1996 decreased from our net income for the second
half of 1995. The single most significant factor in changing an upward quarterly earnings trend to
a downward quarterly trend was an appreciable increase in jet fuel prices beginning in June 1996.
At the time of composing this letter, jet fuel prices are still approximately 25 percent higher than
in January 1996. It is predicted, and we are hopeful, that the level of those prices will soon begin
to recede. We are also optimistic that our recent modest fare increases and intensive cost control
efforts will be productive.
In 1996, we introduced service to four new cities: Tampa, Fort Lauderdale, and Orlando,
Florida, and Providence, Rhode Island. We are very pleased with our results in all four cities;
each has proven to be a valuable addition to our route system. We added Jacksonville, Florida, to
our system on January 15, 1997 and will possibly begin service to another new city this year.
Much of our estimated nine percent increase in available seat mile capacity during 1997 will be
deployed in cities presently served, either as incremental capacity over existing routings or as
introductory capacity over new routings. As an example, today we announced seven new
nonstop flights from Nashville beginning April 6, 1997 and two new nonstop flights beginning
June 11, 1997. The introductory nonstop routings will be Nashville to Detroit, Los Angeles,
Oakland, and Columbus, and current nonstop service will be enhanced from Nashville to Las
Vegas and Tampa.
In October 1997, Southwest will receive delivery of the first new generation 737, the Boeing
737-700. This aircraft will be more fuel efficient, quiet, and emission free, as well as less
maintenance intensive than any of its proud predecessors. All of Southwest’s People salute and
thank the People of Boeing and the General Electric engine division for producing a superb new
“chariot” to carry Southwest and our Customers into the twenty-first century.
The People of Southwest Airlines are not only exceptional but unmatched in the understanding
of their minds; the goodness of their hearts; and the joy of their spirits. Their vision, and their