Southwest expanding in face of cutbacks
Continuing to stray from the mainstream, Southwest Airlines is not shrinking operations but is looking to expand, according to news reports.
Southwest “may expand its fleet next year as competitors shrink operations to blunt surging fuel bills,” according to Southwest CEO Gary Kelly.
He told Bloomberg that the largest low-fare airline may keep as many as 10 older planes set to be retired in 2008 and then add 14 new jets in 2009.
But Mr Kelly also warned deteriorating market conditions could prompt Southwest to put growth plans on hold.
“If we have to slow our growth to zero next year, we’re obviously prepared to do that,” he’s quoted as saying by the AP.
For now, though, the carrier appears ready to take advantage of opportunities that result from the retreat of struggling rivals. AP says:
“Southwest has veered from its old path of simply expanding to growing more selectively — it is adding flights in Denver (for example), where other carriers are retreating, while culling less profitable routes.”
“They have the financial strength to exploit opportunities, more so than any other airline,” Standard & Poor’s credit analyst Philip Baggaley tells Bloomberg News.
The airline now has had lower costs than other carriers, largely because it hedged against rising fuel prices several years ago. But it also increased fares three times earlier this year. Additional hikes are also expected.
Report by David Wilkening
David
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