DALLAS – This morning, Southwest Airlines reported a net profit of $522 million for the fourth quarter (Q4) of 2016, down 2.6% year-over-year (YOY). For the full year, Southwest reported a record net profit of $2.24 billion, up 2.9% YOY, with a full year net pre-tax income of $3.55 billion, up 2.0% YOY.

Southwest’s total operating revenues for Q4 were up 2.0% YOY to $5.08 billion, while for the full year top-line revenues grew 3.1% YOY to $20.43 billion. Operating expenses for Q4 shot up 7.1% YOY to $4.23 billion, driven primarily by a 19.3% YOY rise in economic fuel costs in conjunction with oil prices rising in the last three months of the year. For the full year, operating expenses were still up 6.1% YOY, but the culprit for the full year shifted to employee expenses, up 6.5% YOY to $6.80 billion.

This yielded an operating profit of $846 million in Q4, down 17.5% YOY for an operating margin of 16.7% against 20.6% during the same period a year earlier. For the full year, operating profit came in at $3.76 billion, down 8.6% YOY for an operating margin of 18.4% versus 20.8% in 2015.

Southwest’s revenue growth was driven by a 5.0% YOY increase in capacity (as measured by ASMs) in Q4, with 5.7% YOY growth for the full year. Accordingly, the all important unit revenue figure (PRASM) was down 3.3% YOY for Q4 and down 3.8% YOY for the full year. Unit cost (CASM) increases were moderate, 2.0% YOY for Q4 and 0.4% for the full year, and that holds even excluding fuel expenditures and special items (up 3.6% YOY and up 1.6% YOY respectively).

Airways Senior Business Analyst Vinay Bhaskara is live-blogging the Southwest quarterly earnings call for Q4 and full year 2016. His overall take for Southwest for the quarter and full year was:

Ho-hum, it’s another year of record profits for Southwest and the 44th consecutive year of annual profits. All the metrics are exceedingly solid, even if Q4 operating margin was down in the mid teens as opposed to tipping 20 as Southwest was during its earnings peak. There are a lot of different thematic pieces here with Southwest, unlike some of the peer carriers who had 1-2 overarching ones. The battle with Wall Street over capacity growth was not in absolute terms, but over whether Southwest will tick up capacity growth throughout the year was unintentional comedy at its finest. But lots of positive commentary otherwise about investments outside of aircraft which were good to see.

You can read his coverage of the earnings call below via the ReplyAll tool.