Southwest Airlines (LUV)

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On the Call: Southwest CEO Gary Kelly

Southwest CEO says worst could be ahead for his airline due to fuel prices, recession

By The Associated Press
On Tuesday July 21, 2009, 3:23 pm EDT
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Companies: Southwest airlines co.
Southwest Airlines Co. has been the most consistently profitable U.S. carrier -- it went more than 17 years without a losing quarter until last year. The company made money in the second quarter this year, but CEO Gary Kelly warned he couldn't promise another profit in the third quarter. He discussed the issue in a conference call with analysts and reporters.

QUESTION: You say you can't guarantee a third-quarter profit. Have you ever had to issue that kind of warning in the past?

RESPONSE: "I've been doing this a long time, I don't remember. But I don't think the worst is behind us; I think the worst is ahead of us, and it's primarily because of increased energy costs at this stage ... September is typically the second-worst month of the year, which means it could be really bad ... With $50 crude oil it's one thing, with $70 crude oil in the third and fourth quarters and next year, those are very high energy prices in a recessionary environment and makes for a very difficult outlook."