Southwest Posts Lower Profit; Rival Airlines Report Losses

Southwest Airlines Inc. was on track to again be the only profitable major U.S. airline in the fourth quarter, as rivals American Airlines and Northwest Airlines Corp. posted wider losses Wednesday.

American, the world’s largest carrier, and Northwest posted nearly $750 million in combined losses for the three-month period, signaling that the beleaguered industry as a whole was probably in the red by more than $2 billion.

Southwest, the top U.S. airline by market value, reported a 15% slide in profit for the final three months of the year. Like its rivals, the airline was battered by surging fuel costs and persistent price competition.

But the Dallas-based, low-cost carrier signaled it would keep up pressure on its competitors by adding 29 new Boeing Co. 737-700 jets to its fleet, boosting capacity by 10% in 2005.

“This remains a low-fare environment,” said Southwest Airlines Chief Executive Gary Kelly, who said the airline might start service to a new city in addition to Pittsburgh and Chicago.

Delta Air Lines Inc. recently moved to slash unrestricted fares, putting additional pressure on rivals.

Southwest reported profit of $56 million, or 7 cents a share, compared with $66 million, or 8 cents, a year earlier, slightly missing analysts’ forecasts.

AMR Corp., the parent company of American Airlines, reported a loss of $387 million, or $2.40 a share, compared with a loss of $111 million, or 70 cents, a year earlier.

Gerard Arpey, AMR’s chief executive, said the carrier also expected a first-quarter loss.

Northwest, the No. 4 U.S. carrier, reported a loss of $359 million, or $4.14 a share, nearly triple its $129-million, or $1.49-a-share, loss last year.

Overall, the top six U.S. airlines are expected to report losses of $2.2 billion for the fourth quarter, according to Fulcrum Global Partners.

Southwest shares fell 61 cents to $14.39. Northwest, which also missed analyst forecasts, fell 32 cents to $6.11. AMR, which beat forecasts, fell 11 cents to $8.76.

In contrast to crosstown rival Southwest, American said it was looking to further scale back capacity in the U.S. market on top of cutbacks in 2004 that led to the loss of 3,200 jobs.