Southwest Airlines 2007 Annual Report Download - page 4

Download and view the complete annual report

Please find page 4 of the 2007 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 88

  • 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
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

goals. These projects range from foundational to frontline; from southwest.com to Rapid Rewards to international
codeshare. Achieving these goals is critical to our drive to maintain our Low-Fare Brand while producing
satisfactory financial results.
The U.S. domestic airline revenue growth rate clearly slowed in 2007, and concerns abound regarding the
overall health of our domestic economy for 2008. Given these concerns, coupled with sky-high energy prices,
we decided to slow our fleet growth in 2008 to a planned net seven aircraft, for an anticipated ASM increase of
four to five percent. We have already seen benefits from trimming unproductive flights from our fourth quarter
2007 flight schedule, as the increase in energy costs over the last several years has changed the profit equation
on our marginal flights. We have more such adjustments implemented in our May 2008 flight schedule.
On the other hand, even with higher operating costs, we remain the industry’s low-cost producer, and there
is signicant economic demand for new Southwest ights. Denver rejoined the Southwest schedule in January 2006
and has proved to be a very large and rapidly developing market. In our May 2008 schedule, we will grow to
79 daily departures from just 13 in January 2006. Likewise, we restarted service to San Francisco International
Airport in August 2007. We are already up to 26 daily departures, soon to be at 35, with load factors consistent
with our overall system average. We are delighted and encouraged with these very strong results.
While our nearterm outlook is cautious, we are prepared for bad times, and our longterm outlook is
enthusiastic. Our People have Warrior Spirits, Servants’ Hearts, and Fun-LUVing Attitudes. They are the source
of all that is good about Southwest Airlines. We are most grateful to them for our 2007 results; for embracing
necessary change; and for stepping up to the challenge, once more. They are the key to our success and the
reason we are confident about the future of Southwest Airlines.
January 23, 2008
3
SOUTHWEST AIRLINES CO. ANNUAL REPORT 2007
Gary C. Kelly
Chief Executive Officer
Colleen C. Barrett
President
Herbert D. Kelleher
Executive Chairman