Southwest Airlines Company (LUV) has reported 33.56 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $388 million, or $0.62 a share in the quarter, compared with $584 million, or $0.88 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $582 million, or $0.93 a share compared with $623 million or $0.94 a share, a year ago. Revenue during the quarter dropped 3.37 percent to $5,139 million from $5,318 million in the previous year period. Gross margin for the quarter contracted 110 basis points over the previous year period to 69.60 percent. Total expenses were 86.48 percent of quarterly revenues, up from 76.97 percent for the same period last year. That has resulted in a contraction of 951 basis points in operating margin to 13.52 percent.
Operating income for the quarter was $695 million, compared with $1,225 million in the previous year period.
However, the adjusted operating income for the quarter stood at $972 million compared to $1,047 million in the prior year period. At the same time, adjusted operating margin contracted 77 basis points in the quarter to 18.91 percent from 19.69 percent in the last year period.
Gary C. Kelly, chairman of the Board, president, and chief executive officer, stated, "We are pleased to report another quarter of strong cash flows and healthy margins. We benefited from low fuel prices and record third quarter traffic levels in a competitive fare environment. I am very grateful for our People and their hard work. They did an outstanding job and produced superb results, especially considering the operational challenges caused by the technology outage in July. Their efforts to serve our Customers were truly heroic, and I am very appreciative.
Operating cash flow improvesSouthwest Airlines Co has generated cash of $3,584 million from operating activities during the nine month period, up 22.99 percent or $670 million, when compared with the last year period. The company has spent $1,433 million cash to meet investing activities during the nine month period as against cash outgo of $967 million in the last year period.
The company has spent $1,768 million cash to carry out financing activities during the nine month period as against cash outgo of $1,489 million in the last year period.
Cash and cash equivalents stood at $1,966 million as on Sep. 30, 2016, up 12.99 percent or $226 million from $1,740 million on Sep. 30, 2015.
Working capital remains negative
Working capital of Southwest Airlines Co was negative $2,977 million on Sep. 30, 2016 compared with negative $2,511 million on Sep. 30, 2015. Current ratio was at 0.62 as on Sep. 30, 2016, down from 0.65 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 42 days for the quarter from 43 days for the last year period. Days sales outstanding went up to 12 days for the quarter compared with 8 days for the same period last year.
Days inventory outstanding has decreased to 10 days for the quarter compared with 19 days for the previous year period. At the same time, days payable outstanding went down to 63 days for the quarter from 70 for the same period last year.
Debt moves up
Southwest Airlines Co has witnessed an increase in total debt over the last one year. It stood at $3,295 million as on Sep. 30, 2016, up 23.50 percent or $627 million from $2,668 million on Sep. 30, 2015. Total debt was 14.30 percent of total assets as on Sep. 30, 2016, compared with 12.61 percent on Sep. 30, 2015. Debt to equity ratio was at 0.41 as on Sep. 30, 2016, up from 0.38 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 22.42 for the quarter from 39.52 for the same period last year. Disclaimer: Please note that this is an auto-generated article. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website. For queries contact: editor@irisindia.net
