Southwest Airlines 1997 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 1997 Southwest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 58

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58

28
SOUTHWEST AIRLINES CO. ♥ FIVE SYMBOLS OF FREEDOM
The January 1998 load factor decreased to 54.0 percent from 60.2 percent in January
1997 due to heavy promotional fare activities in the 1997 period. However, revenue
yield per passenger mile continues to be strong in January 1998 despite difficult
comparisons due to the lapse of the federal excise tax from January 1 to March 7,
1997. Comparisons in February and March will be more difficult due to fare increases in
February 1997. (The immediately preceding sentence is a forward-looking statement
which involves uncertainties that could result in actual results differing materially from
expected results. Some significant factors include, but may not be limited to,
competitive pressure such as fare sales and capacity changes by other carriers,
general economic conditions, and variations in advance booking trends.)
Freight revenues in 1997 were $94.8 million, compared to $80.0 million in 1996. The
18.4 percent increase in freight revenues exceeded the 9.2 percent increase in ASMs
for the same period primarily due to an increase in United States mail services and
increased air freight volumes resulting, in part, from the United Parcel Service labor
strike during third quarter 1997.
Other revenues increased by 45.6 percent in 1997 to $82.9 million, compared to
$56.9 million in 1996. This increase is primarily due to the sale of frequent flyer
segment credits to participating partners in the Company’s Rapid Rewards frequent
flyer program.
OPERATING EXPENSES Consolidated operating expenses for 1997 were $3,292.6
million, compared to $3,055.3 million in 1996, an increase of 7.8 percent, compared to
the 9.2 percent increase in capacity. Operating expenses per ASM decreased 1.3
percent in 1997, compared to 1996, primarily due to lower jet fuel prices; lower aircraft
engine repair costs; and favorable results from numerous Companywide cost reduction
efforts.
Unit costs are expected to benefit in first quarter 1998, versus first quarter 1997, from
lower jet fuel prices. Excluding jet fuel costs, operating expenses per ASM are expected
to increase primarily due to higher maintenance costs as management believes first
quarter 1998 maintenance unit costs will be higher than the same period in 1997 due to
an unusually low number of aircraft engine overhauls performed in first quarter 1997.
(The immediately preceding two sentences are forward-looking statements which
involve 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 jet fuel prices.)