“We had a strong revenue Performance in 2011.”
– Gary C. Kelly,
Chairman of the Board, President, and Chief Executive Officer,
Southwest Airlines
Chairman of the Board, President, and Chief Executive Officer,
Southwest Airlines
Our Performance in 2011 marked our 39th consecutive year of profitability. Staying true to our Customer Service commitment in 2011, we once again earned the leading U.S. Department of Transportation Customer Satisfaction ranking. We also achieved a record load factor, grew our domestic market share, and maintained our distinction as the largest domestic airline.1 Through continued revenue management, network optimization, and ongoing revenue initiatives such as Business Select, All New Rapid Rewards®, and EarlyBird Check-In™, we grew our unit revenues by 5.6 percent. Our outstanding revenue Performance helped blunt soaring jet fuel prices, but ultimately, fuel drove the year-over-year decline in earnings. With fuel costs accounting for 37.7 percent of our operating expenses in 2011, we continue our focus on our cost Performance—primarily on improving productivity and eliminating waste. In addition, we continue to implement fuel conservation measures and manage our fuel hedging program. Despite the 2011 decline in earnings, we ended the year in a strong financial position. In 2012, we are focused on making progress toward our financial targets and are carefully monitoring our capital spending with a focus on generating free cash flow.C
On May 2, 2011, we acquired AirTran Holdings, Inc., the former parent company of AirTran Airways, Inc., for a combination of cash and Southwest Airlines’ common stock. In the Performance section, Southwest Airlines data includes the May 2, 2011, through Dec. 31, 2011, results for AirTran, unless otherwise stated. Data presented also includes the impact of purchase accounting as of May 2, 2011, where applicable.
CONSOLIDATED HIGHLIGHTS
dollars in millions, except per share amounts (GAAP)2
| 2011 | 2010 | Change | |
| Operating revenues | $15,658 | $12,104 | 29.4% |
| Operating expenses | $14,965 | $11,116 | 34.6% |
| Operating income | $693 | $988 | (29.9)% |
| Operating margin | 4.4% | 8.2% | (3.8) pts. |
| Net income | $178 | $459 | (61.2)% |
| Net margin | 1.1% | 3.8% | (2.7) pts. |
| Net income per share, basic | $0.23 | $0.62 | (62.9)% |
| Net income per share, diluted | $0.23 | $0.61 | (62.3)% |
| Stockholders’ equity | $6,877 | $6,237 | 10.3% |
| Return on average stockholders’ equity | 2.7% | 7.9% | (5.2) pts. |
| Stockholders’ equity per common share outstanding | $8.90 | $8.35 | 6.6% |
| Revenue Passengers carried | 103,973,759 | 88,191,322 | 17.9% |
| Revenue Passenger miles (RPMs) (000s) | 97,582,530 | 78,046,967 | 25.0% |
| Available seat miles (ASMs) (000s) | 120,578,736 | 98,437,092 | 22.5% |
| Passenger load factor | 80.9% | 79.3% | 1.6 pts. |
| Passenger revenue yield per RPM | 15.10¢ | 14.72¢ | 2.6% |
| Operating revenue yield per ASM | 12.99¢ | 12.30¢ | 5.6% |
| Operating expenses per ASM | 12.41¢ | 11.29¢ | 9.9% |
| Aircraft in service at yearend | 698 | 548 | 27.4% |
| Fulltime equivalent Employees at yearend | 45,392 | 34,901 | 30.1% |
| 1 | As measured by the number of originating passengers boarded and based on data available from the U.S. Department of Transportation as of Sept. 30, 2011. |
| 2 | Compliant with generally accepted accounting principles (GAAP). |
