Southwest CEO Kelly hedges on beginning Hawaii flights in 2018

Southwest Airlines isn’t ready yet to announce when or from where it will begin flights to Hawaii.

The Dallas-based carrier, which said in October it will begin selling tickets to Hawaii this year, said Thursday it is pleased with the progress made so far to obtain authorization from the Federal Aviation Administration for extended operations (ETOPS) to operate between the mainland and Hawaii. That certification measures how far an aircraft can be safely away from land and over water if one engine gives out.

“Work is well underway to begin flying to Hawaii, so that is the focus for this year,” Southwest Chairman and CEO Gary Kelly said on the company’s earnings conference call.

Kelly was noncommittal in answering a question about whether the start of Southwest’s Hawaii flights could be pushed into next year.

“No, I think our goal has been from the outset to be flying by the end of the year,” Kelly said. “Achieving that goal is not totally within our control. I think what is actually encouraging is that in terms of the work that we do control, we are right on target. And gosh, we’re what, six months into this, and I guess three months after our announcement? So we are well underway. I think there is a chance that we can be flying by the end of the year, and that will be our goal.”

Kelly, when pressed by an analyst, then hedged his answer.

“I think what we’re much more confident in saying is that we’ll be at least selling by the end of the year,” he said. “But I don’t think that we are less likely to be flying than we have been. If anything, we may be more likely just because we know now what we’ve been able to get done over the past six months.”

Kelly declined to put a percentage on the chance of Southwest flying to Hawaii in 2018.

“I don’t know how to do that because, again, we’re working with the federal government,” he said. “And now it will be dependent upon their timetable. And then they may come up with work that we maybe underestimated. So I just don’t know that there’s any way to handicap that. But what I’ve told our team is, in the grand scheme of things, whether we’re flying late this year or early next year, it won’t matter over the next generation … We want to launch when everything is all lined up. And if we get it done and we’re up and flying by the end of this year, I’ll be happy. I think everybody will be. If we don’t, it won’t be the end of the world.”

Kelly talked about Hawaii in conjunction with the airline’s earnings announcement in which Southwest said fourth-­quarter profit rose to $1.9 billion from $522 million in the year-earlier period as the new tax law reduced the company’s deferred tax liability. Revenue rose 3.9 percent to $5.3 billion,.

For the year, Southwest said earnings soared to a record $3.5 billion from $2.2 billion in 2016. Kelly said the lower corporate tax rate, which was reduced to 21 percent from 35 percent beginning this year, will save Southwest hundreds of millions of dollars in the future. Revenue increased 3.7 percent last year to $21.2 billion.