Southwest Airlines Co., the discount carrier that has never had layoffs, plans to shrink its work force amid spending cuts of at least $100 million after higher fuel prices helped cost increases outstrip sales growth.
Southwest, which reduced its staff by 1,400 with buyouts in 2009, will be “trimming our total headcount complement overall,” Chief Executive Officer Gary Kelly said in a message to employees.
Kelly later said on a conference call that the airline isn’t contemplating layoffs.
Third-quarter profit fell to $97 million, or 13 cents a share excluding one-time items, on weaker travel demand and a lower average fare, Southwest said. That compared with earnings of $122 million, or 15 cents, a year earlier.
The result was a penny above the average 12-cent estimate on that basis from 16 analysts compiled by Bloomberg News. Sales were flat at $4.31 billion.
The airline’s cost to fly each seat a mile, a measure of efficiency, rose 5 percent in the third quarter and 3.7 percent in the nine months through September.
Fuel costs increased 11 percent in the first three quarters, and Southwest expects prices to climb again before year end.
“At the end of the day, airlines are largely a commodity business,” said Savanthi Syth, a Raymond James & Associates Inc. analyst. “In that type of environment, service is important, but maintaining lower costs is essential.”
