Cheap fuel and rising revenue help boost Southwest Airlines

DALLAS (AP) — Cheaper fuel and higher revenue boosted Southwest Airlines to a record third quarter profit of $584 million.

Passengers paid lower average fares in the third quarter than a year ago, but that could be about to change. Southwest said that a key revenue-per-mile figure will rise in the fourth quarter, likely indicating that it expects higher fares.

The stock rose more than 7 percent in afternoon trading today.

Southwest said net income increased by $225 million from last year's third quarter, helped by fuel-pump savings of $450 million, or 32 percent.

CEO Gary Kelly called it "a terrific quarter."

"While it is true that the majority of the 71 percent surge in our earnings per share was due to a dramatic drop in jet fuel prices, there are a lot of other good things happening," Kelly said on a call with analysts. He cited solid demand, the smallest percentage of empty seats in Southwest's history, and a new credit-card deal that brought in more cash.

Excluding nonrepeating items, Southwest said it earned 94 cents per share. That topped Wall Street expectations, as nine analysts surveyed by Zacks Investment Research predicted 92 cents per share.

Revenue rose 11 percent, to $5.32 billion, which also topped the analysts' forecast. Three analysts surveyed by Zacks expected $5.1 billion.