Southwest Airlines 2005 Annual Report Download - page 36

As disclosed in Note 17 to the Consolidated Financial Statements, results for 2003 included $271 million as
""Other gains'' from the Emergency Wartime Supplemental Appropriations Act (Wartime Act). The Company
believes that excluding the impact of this special item enhances comparative analysis of results. The grant was made to
stabilize and support the airline industry as a result of the 2003 war with Iraq. Financial results including the grant
were not indicative of the Company's operating performance for 2003, nor should they be considered in developing
trend analysis for future periods. There were no special items in 2004. The following table reconciles and compares
results reported in accordance with Generally Accepted Accounting Principles (GAAP) for 2004 and 2003 with
results excluding the impact of the government grant received in 2003:
2004 2003
(In millions, except
per share and per
ASM amounts)
Operating expenses, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,976 $5,454
Profitsharing impact of government grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (40)
Operating expenses, excluding grant impact ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,976 $5,414
Operating expenses per ASM, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $.0777 $.0760
Profitsharing impact of government grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (.0006)
Operating expenses per ASM, excluding grant impact ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $.0777 $.0754
Operating income, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 554 $ 483
Profitsharing impact of government grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 40
Operating income, excluding impact of government grants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 554 $ 523
Net income, as reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 313 $ 442
Government grant, net of income taxes and profitsharing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (144)
Net income, excluding government grants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 313 $ 298
Net income per share, diluted, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ .38 $ .54
Government grant, net of income taxes and profitsharing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (.18)
Net income per share, diluted, excluding government grantsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ .38 $ .36
Excluding the government grant received, consoli- The Company increased ASMs by 7.1 percent
dated net income for 2004 increased $15 million, or compared to 2003, primarily as a result of the net
5.0 percent, compared to 2003 net income of $298 mil- addition of 29 aircraft during 2004 (47 new aircraft,
lion. The increase primarily was due to higher revenues net of 18 aircraft retirements). The Company's load
from the Company's fleet growth and addition of capac- factor for 2004 (RPMs divided by ASMs) was
ity, which slightly exceeded higher costs. Excluding the 69.5 percent, compared to 66.8 percent for 2003.
impact of the 2003 government grant, 2004 operating Although this represented a strong load factor perform-
income increased $31 million, or 5.9 percent, compared ance for the Company, passenger yields for 2004 (pas-
to 2003. senger revenue divided by RPMs) remained under
considerable pressure due to significant capacity in-
Operating Revenues. Consolidated operating rev- creases by a large majority of carriers. Passenger yields
enues increased $593 million, or 10.0 percent, primarily for 2004 declined to $.1176, compared to $.1197 in
due to a $539 million, or 9.4 percent, increase in 2003, a decrease of 1.8 percent, because of heavy fare
passenger revenues. The increase in passenger revenues discounting arising as a result of the glut in industry
primarily was due to an 11.4 percent increase in RPMs seats available.
flown, driven by the Company's growth and a 2.7 point
increase in the Company's load factor compared to Consolidated freight revenues increased $23 mil-
2003. lion, or 24.5 percent. Approximately 70 percent of the
increase was due to an increase in freight and cargo
revenues, primarily due to more units shipped. The
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