Southwest Profitable Again After Several Losses

Contributing Editor Carl Unger believes that every trip is worth taking. He loves an extended trip to Europe as much as he enjoys exploring the towns and landscape near home. Basically, you'll find him wherever there is good food, fresh air, and plenty of stories to bring home.

Carl has been writing for SmarterTravel since 2005. His travel writing has also appeared on USA Today and the About.com Boston travel guide.

The Handy Item I Always Pack: "It's not revolutionary, but a small Moleskine notebook is my one travel must-have. It's great for noting things you want to remember and it takes up hardly any space in your bag."

Ultimate Bucket List Experience: "Japan. I'd love to take a month off and visit the cities, temples, and countryside. I'm fascinated by the country's juxtaposition of ancient traditions and modern ambitions."

Travel Motto: “Why do you go away? So that you can come back. So that you can see the place you came from with new eyes and extra colors. And the people there see you differently, too. Coming back to where you started is not the same as never leaving.” –Terry Pratchett

Aisle, Window, or Middle Seat: "Window."

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Southwest posted a $54 million profit in the second quarter of 2009, following three consecutive quarterly losses. This number is down from last year’s $321 million Q2 profit, due largely to a steep decline in revenue.

Southwest used to be one of the most reliably profitable airlines in the business. Quarter after quarter, the airline would post profits even as other airlines struggled. This was especially apparent in 2008, when the airline’s clever/lucky (depending on how you look at it) fuel hedges propelled it to big profits while the competition suffered mightily due to monstrous fuel bills.

Recently, however, the airline succumbed to the same market forces assailing the rest of the industry. Plummeting demand dragged down revenues, and Southwest’s financials plunged into the red for three straight quarters. And despite posting a profit this quarter, the CEO Gary Kelly isn’t exactly bullish on the near future:

“Demand for business travel remains weak, and we continue to stimulate traffic with more discounted and promotional fares. Unless demand rebounds significantly, we expect third quarter 2009 unit revenues to decline year-over-year more than [they did in] the second quarter.”

Simply put: There’s a long road ahead.

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