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Southwest Airlines overcame hurricanes, higher fuel prices, and slightly lower fares to boost third-quarter profit 30 percent.
The airline predicted Thursday that a measure of pricing power will be stronger in the fourth quarter than it was in the third, in line with forecasts from rivals.
A key to the quarter was Southwest’s ability to hold labor costs in check while benefiting from solid travel demand that is lifting the U.S. airline industry.
Southwest, which carries more passengers inside the U.S. than any other airline, said it earned $503 million, up from $388 million a year earlier.
Investors are looking for reassurance that Southwest won’t grow too fast and put down downward pressure on fares.
Regular customers will be more interested to hear more about Southwest’s recently announced plan to begin flying to Hawaii. The airline hasn’t said when those flights will start.
Excluding special items such as costs to settle fuel-hedging contracts, the Dallas company said it earned 88 cents per share. That was a penny better than analysts had predicted, according to a survey by Zacks Investment Research.
Revenue was up 3 percent to $5.27 billion, just shy of expectations.
Southwest canceled 5,000 flights and lost $100 million in revenue in the third quarter due to hurricanes — Harvey shut down its operations in Houston for several days.
The average one-way fare slipped 2 percent to $143.67.
Another revenue figure, the cost to fly a seat one mile, which is tracked closely by airline investors, fell 0.5 percent. Southwest said the same figure would rise by up to 1.5 percent in the fourth quarter, a hint of higher fares to come.
The company spent 7 percent more on fuel but 6 percent less on labor than it did a year earlier.