In its 45th year of service, Dallas-based Southwest Airlines Co. (LUV, Financial) continues to differentiate itself from other air carriers with exemplary customer service. Southwest operates a network of 97 destinations across the U.S. and seven additional countries with more than 3,900 departures a day during peak travel season.
Based on the U.S. Department of Transportation’s most recent data, Southwest Airlines is the nation's largest carrier in terms of originating domestic passengers boarded. The company operates the largest fleet of Boeing (BA, Financial) aircraft in the world, the majority of which are equipped with satellite-based WiFi providing gate-to-gate connectivity.Â
The company recently reported strong first quarter results. The operating revenues grew in line with the company’s expectations. Solid bookings and revenue trends have continued. The first quarter was marked by decrease in fuel costs, strong margins and cashflows.
Record first quarter
Record first quarter net income was $567 million, or 88 cents per diluted share, which was $451 million during the prior year quarter.
First quarter GAAP net income was a record $511 million, or 79 cents per diluted share. GAAP operating income was a record $944 million.
Operating income was a record $952 million, resulting in a strong first quarter operating margin of 19.7%. Free cash flow was $1.2 billion.
The company returned $596 million to shareholders through the combination of dividends and share repurchases.
The company's total operating revenues during the first quarter were a record $4.8 billion, which marked an increase of 9.3% from the prior year quarter.
(Source: Company’s website)
Positive attributes of the company
- It is the largest domestic airlines in the U.S.
- Growing revenue and profitability.
- Low-cost structure.
- Increasing passenger demand.
- Focus on customer retention.
- Stable annual returns.
- Decrease in operating costs.
On a concluding note
Southwest is committed to returning value to its shareholders. Since August 2011, Southwest has returned over $4.3 billion to shareholders through share repurchases and dividends. Southwest returned approximately $596 million to shareholders in first quarter 2016 through the payment of $96 million in dividends and the repurchase of $500 million in common stock.Ă‚
The company was named to Fortune's list of World's Most Admired Companies for the 22nd consecutive year.Ă‚
The company is having a good time right now and is poised to grow. Investors may add this company to their portfolio. It is going to create shareholder returns.
Disclosure: I do not hold any position in the company.
