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Southwest CEO Gary Kelly weighs in on earnings, his devotion to keeping airfare prices low, improving cabins and how he plans to stay competitive.
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Well it is not just the banks that we are hearing from today this morning we also heard from southwest airlines' largest taller of domestic passengers.
Has been profitable for 36.
Years and the just concluded fourth quarter.
Did not disappoint the stock.
Is actually moving today there you have it up 31 cents 933.
After posting a 153.
Million dollar fourth quarter profit mainly.
From fuel hedging.
Earlier had a chance to talk -- president CEO Gary Kelly I asked him was southwest can -- to offset higher fuel costs this year.
I think we're in a good place in terms of managing our fuel cost.
We need to drive revenue growth.
We also need to focus.
On the rest of our cost structure.
More intensely.
And drive some productivity improvements there are so.
The outlook right now is relatively stable for fuel prices.
At least in terms of our planning so we're not assuming that we're gonna see another year of large increases like we didn't -- -- eleven.
Well let me ask you about fare hikes because you didn't raise fares about 7% year over year for 2011.
Do you have kind of a sense.
If you're gonna have to raise fares again in 2012 and what that might be.
I can't really speak specifically to fare increases but.
-- with.
35%.
Increase in jet fuel prices in 2011.
We were forced to raise our -- we don't like to do that.
But we have to obviously cover costs.
Hopefully that won't continue again and in -- me twelve.
And so our our revenue.
Objective right now is simply to catch up with where fuel prices have risen to in 2011 so.
Our earnings or where they need to be there about a third of what our target is and will need to continue to.
Did do everything that we can to improve revenues as well as controller rest of our cost structure of what you out of your changing I'm sorry Kerry -- cents.
Well -- consider we are the low fare leader in the country.
And we we have no plans to charge.
For the first -- for second checked bags and bags will continue to fly free on Southwest Airlines.
You have complete flexibility to change your itinerary without a change be penalty.
So all of those are very consumer customer friendly policies will continue -- will do our best to -- -- fares low and you can count on southwest below for leader in the country.
OK let me ask you about the scene changes on a 737700.
You're gonna start adding and you're gonna add another row.
Of seeds are you gonna go from a 137 -- of 243.
That you are and it you gonna lose oldest seat pitch.
And and the Anderson at the seeds are gonna be a little bit center for the customers are you concerned that with his knees slightly thinner seats they're gonna -- -- -- -- -- customer push back.
Not at all I think.
The seats will be more comfortable.
There -- customers have today then that's that is what we're doing here we are improving.
The customer experience on board the aircraft.
The seats are -- so different that we are able to.
Put another row seats in is is really the way to -- to understand that but it is a much more comfortable seat.
It take that -- takes up less room on the aircraft.
The part of the personal space that our customers have -- actually be improved.
As compared to what they have today.
Okay okay let's talk about the competition in particular but you share the same backyard.
With American Airlines us Dallas Fort Worth area so with American in bankruptcy what type of opportunity.
Does that present for -- lines.
It's all speculative at this point because we don't know what they're going to do we know that they'll change.
We know that they'll be forced to.
Improve their economics by driving their costs down shedding debt.
Shareholders will likely lose all of their investments all of those kinds of things will have to take place.
Or else the company will have to be liquidated if you can't make those improvements so we we know that we're gonna be facing a more formidable.
Competitor financially in the future.
But probably much smaller and where those opportunities are in the marketplace we don't know.
In the near term I do think that will have some opportunities to pick up some.
Customers as American walks away from them.
But all that speculative at this point.
I Gary Kelly CEO Southwest Airlines Gerri thank you.
Thank you Sheryl thanks ravenous.
