Southwest Airlines earnings hit record $1.1 billion

DALLAS – Southwest Airlines said Thursday it earned a record $1.1 billion in 2014, the first time the Dallas-based carrier has gone over the $1 billion mark.

Its previous best year came in 2013, when its net income reached $754 million.

“Our strategic plan has come together successfully, and we have realized significant contributions from the AirTran integration, fleet modernization efforts and the continued growth of our Rapid Rewards program,” Southwest chairman and CEO Gary Kelly said in the airline’s announcement.

In the fourth quarter, Southwest earned $190 million, or 28 cents a share, on $4.63 billion in operating revenues. That compares to $212 million, 30 cents a share, on $4.04 billion in revenues in the same quarter of 2013.

The quarter was marked by the end of its AirTran Airways unit, which flew its last flight Dec. 28. AirTran boosted Southwest’s earnings by $500 million in 2014, the company said.

Since Southwest announced the merger in September 2010 and closed the deal in May 2011, the AirTran integration has cost Southwest about $538 million

Also Thursday, United Airlines said its fourth-quarter profit fell 80 percent due to severance costs and contracts that lost value as oil prices tumbled. Without those one-time setbacks, however, the airline’s adjusted profit soared.

Excluding one-time charges for hedging, severance payments and other things, United Continental Holdings Inc. earned $2 billion in 2014, an 89 percent increase over the year before.

Solid travel demand is translating into higher fares and more money from add-on fees for checked bags and other services.