Southwest finds its fare hikes 'delightful'
The airline has raised ticket prices 6 times this year, but that seems not to have dented business much. With video updates.
Higher airfares are a bummer, unless you're the chief executive of Southwest Airlines (LUV). Gary Kelly said he's had "delightful success" bumping up ticket prices to pay for higher fuel costs.
I doubt any of Southwest's passengers would describe the higher fares as delightful, but the price hikes didn't keep them away. In fact, Southwest's passengers flew 13% more in February than a year earlier. That's why Southwest isn't ruling out future fare increases, The Associated Press reports.
"We've had six fare increases so far this year. That's a lot in 90 days," Kelly said at an investor conference, the AP reports. "On the other hand, our traffic has held up more than well -- it's been very, very strong."
Post continues after this video analysis of Southwest's recent earnings:
Southwest shares have not held up as well. The stock has roller-coastered over the past year, dropping about 6% to $12.32. Year to date, shares are down 7%.
Fare hikes aren't stopping the carrier from increasing its capacity by 5% to 6% over last year. The airline will also begin flying to three more cities: Charleston and Greenville, S.C., and Newark, N.J. Southwest doesn't fly overseas.
Not every airline is doing as well. Delta Air (DAL) said it will cut its capacity to Japan by up to 20% through May, Bloomberg reported. Japan is a key hub for the airline, and those reductions will have a net impact of between $250 million and $400 million. American Airlines (AMR) is maintaining its current capacity but said it saw a "modest" revenue drop after the Japan crisis.
US Airways (LCC) said its bookings dropped 20% on the day of the Japan earthquake. Bookings are still down by a "couple percent," the airline said.
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The company is planning a 10-for-1 split, which will cut its share price dramatically.
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