Southwest and AirTran ready further integration as profit drops

Southwest Airlines reported lower quarterly profit on Thursday as it wrestled with higher costs for fuel, maintenance materials and salaries.

The carrier, which acquired AirTran Holdings in 2011, said bookings looked strong in the current quarter and added a key revenue measure would likely rise in January from a year earlier.

The traditional low-fare leader, Southwest is facing labor and fuel cost pressures as competition rises not only with legacy airlines such as Delta Air Lines Inc, but also with newer carriers with a low-cost focus, like Spirit Airlines Inc.

Southwest’s net income fell to $78 million, or 11 cents a share, for the fourth quarter, from $152 million, or 20 cents a share, a year earlier.

Excluding items, profit was 9 cents a share, compared with 8 cents a share expected by analysts on average, according to Thomson Reuters I/B/E/S.

Revenue rose 1.6 percent to $4.17 billion, helped by a 5.4 percent increase in the average passenger fare.

Operating expenses rose 3 percent, with costs tied to wages and salaries up 4.5 percent. Fuel and oil costs rose 0.7 percent and maintenance materials and repair expenses climbed 13 percent.