Southwest's Not Afraid to Talk Profit

During the first quarter, Southwest said revenue passenger miles increased 15.4%, while available seat miles rose 9.1%, resulting in a 3.8-point increase in its load factor to 69.2%.

Yield per revenue passenger mile rose to 12.68 cents, up 5.4%. Revenue per available seat mile climbed 11.3% to 9.15 cents. Meanwhile, cost per available seat mile was 8.70 cents, up more than 11%.

CASM, excluding fuel, was down slightly from last year's 6.44 cents. Kelly said Southwest expects that its full-year CASM excluding fuel will be 6.48 cents, representing essentially no change in year-over-year costs.

CFO Laura Wright said Southwest continues to benefit from its hedging positions. For the rest of 2006, the airline has 70% of its fuel hedged at $36 a barrel. The company is 60% hedged for 2007, about 35% hedged for 2008 and 30% for 2009. She said the company is exploring a hedging strategy for 2009 and beyond.

Southwest's capital expenditures totaled $262 million for first quarter 2006. In January, the company's board authorized stock buybacks up to $300 million. As of Wednesday, the company had repurchased 15.4 million shares for $261 million. Southwest ended the quarter with $2.9 billion in cash and short-term investments.

Kelly said Southwest's plan to code-share on ATA international flights in 2009 means the company will build the capacity for international bookings into its reservation system, but he cautioned that his airline has no plans to fly overseas.

"I just don't want Southwest Airlines to be distracted," he said. "We have a lot of work to do on our domestic growth. Now is not the time to let up on our domestic route system development."