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Southwest Airlines CEO Gary Kelly explains how the company plans to be the best low-cost carrier.
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Southwest Airlines posting a third quarter loss of a 140 million dollars but they didn't beat the street expectations.
And the stock has been actually rising all morning earlier I had a chance at southwest CEO Gary Kelly.
What their biggest challenges going into the final quarter.
-- Well at this point I think it is just making sure that demand holds up.
You know we haven't seen any signs of weakness at all as you pointed out we had a very strong revenue performance in the third quarter.
I'm anticipating another one here in fourth quarter but.
With all the uncertainty there is in the in the world and and in our country -- we just have to keep around that in the meantime.
You know it feels like we've got fuel prices under control.
For the next quarter or so although we're very concerned about.
Fuel prices taking off.
If worldwide economies pick up at all here are so -- we'll just have to keep an -- on that as well.
When it and that didn't have to -- play into the third quarter for you -- because obviously third quarter fuel costs were back 30% higher year over year.
As you go to the fourth quarter and know that you got obviously hedge.
As best you can what can you do on the on the pricing side because we just had a big fare hike delta.
Came out at the fare -- you -- have followed most of the of the airline industry household is that gonna be kind of a trend.
Going through the rest of the year to cut a deal with the higher fuel costs.
Well I think the problem is despite the fact that revenues are performing quite well our revenues are up substantially over the last fortified years.
And we've done a number of different things to derive that.
But our earnings are down significantly compared to last year because fuel prices are up so much just so you know you're you're right there are 33 point 8%.
On a fuel price per gallon basis so that's.
That's a huge problem we haven't quite solve that yet for the bottom line and we'll need to get our revenues up through one technique or another.
We've had nine fare increases this year I hate to do that but we have to keep the company obviously profitable and put ourselves in a position where we can grow we have a lot of places that -- -- to add to our route map.
And bring more customers more low fares.
So that's that's the balance that we're trying to strike -- -- -- keeper fares as low as possible by keeping the rest of our -- structures -- off.
Well let me ask you about that because last year you had about a 143000.
Resume is coming into Southwest Airlines so a lot of interest -- working at the company that you only hired.
Little more than 2000 people you said that you want to grow -- any kind of sense of what the hiring picture is gonna look like for 2012.
I do have a sense of that you know we have not.
Grow in the airline a lot this year and 4011 but we have grown some will mover of the fleet.
We'll grow our available seat -- capacity.
And of course I'm taking into account the fact that we grew 4546%.
Just by by acquiring -- trend.
But next year they're combined southwest AirTran.
Fleets.
Will target to stay roughly flat.
And also have a hiring that is relatively.
Modest.
Will have some attrition so we'll have some replacement are -- to do.
But we're not planning on growing the airline in 2012 we are preparing the airline to grow.
In the future.
And I hope it's 2013.
But certainly when our business picks up to the point where the profits are sufficient to grow we wanna be ready for that and I would love to grow this airline.
I'm sure -- -- -- Gary at this point is considering the overall industry in your neighbor right there in Dallas American Airlines has -- A lot of speculation about a bankruptcy there -- having ongoing -- to negotiations with their pilots -- have not only gone anywhere I mean does that.
Kind of reflecting your thinking about how you handle southwest of course different.
Airlines but at the same time -- -- all kind of competing for the same customer basically.
Well it it does.
In other words we know we don't live in a vacuum here we know that it is a very competitive industry.
And we have to have competitive advantages.
To think -- we're gonna win customers.
So we bring a number of things.
To the party there but.
In addition to our people we think we will we are the best people.
They have the best customer service attitude.
They're very caring they are very good humored.
And they take great care of our customers in addition to that we want to be the low cost producer.
We want to be the low fare leader.
-- we've done that for four decades.
And we're still in that position and we want to grow that from here or so.
That just puts even more pressure or emphasis on the need to keep our costs as low as possible.
And to your point.
If all of our legacy competitors go bankrupt.
And use that as a strategy to get their cost down which they have.
Except for American.
-- yeah I closes that gap compared to -- southwest so we're very mindful of that but even with that were still low cost producer.
My thanks to Gary Kelly my conversation with him earlier this morning about the company's.
Third quarter report the CEO of Southwest Airlines --
