Southwest Airlines 1999 Annual Report Download - page 18

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1999. (The immediately preceding two sentences are forward-looking statements involving 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 and any unscheduled required
aircraft airframe or engine repairs.)
Operating expenses per ASM for 1999 and 1998 were as follows:
OPERATING EXPENSES PER ASM
1999 1998
Increase
(Decrease)
Percent
Change
Salaries, wages, and
benefits 2.39¢ 2.35¢ .04¢ 1.7%
Employee profitsharing and
savings plans .36 .35 .01 2.9
Fuel and oil .93 .82 .11 13.4
Maintenance materials and
repairs .70 .64 .06 9.4
Agency commissions .30 .33 (.03) (9.1)
Aircraft rentals .38 .43 (.05) (11.6)
Landing fees and other
rentals .46 .45 .01 2.2
Depreciation .47 .47 – –
Other 1.49 1.48 .01 0.7
Total 7.48¢ 7.32¢ .16¢ 2.2%
Salaries, wages, and benefits per ASM increased 1.7 percent in 1999. This increase resulted
primarily from increases in benefits costs, specifically workers compensation and health care expense.
Employee profitsharing and savings plans expense per ASM increased slightly due to higher
earnings available for profitsharing.
Fuel and oil expenses per ASM increased 13.4 percent in 1999, primarily due to a 15.4
percent increase from 1998 in the average jet fuel cost per gallon. The average price paid for jet fuel in
1999 was $.5271, including the effects of hedging activities, compared to $.4567 in 1998. The
Company’ s 1999 average jet fuel price is net of approximately $14.8 million in gains from hedging
activities. Hedging activities in 1998 were not significant. For fourth quarter 1999, the average cost per
gallon increased 54.5 percent to $.6713 compared to $.4346 in fourth quarter 1998, including the
effects of hedging activities. As of February 24, 2000, the Company had hedged its exposure to fuel
price increases with combinations of purchased crude oil call options, crude oil collars, and/or fixed