UPDATE 1-Southwest CEO warns of volatile fuel prices

* CEO says outlook improved

* Fuel price remains a risk

* Southwest shares down 3.5 pct

CHICAGO, May 19 (BestGrowthStock) – The outlook for Southwest
Airlines (LUV.N: ) is much brighter in 2010 than it was a year
ago, but volatile fuel costs are still a big risk for the
industry, Southwest’s chief executive said on Wednesday.

“It is imperative for us and the airline industry that we
continue to focus on fuel efficiency,” Gary Kelly said at the
company’s annual shareholder meeting in Dallas.

Although crude oil, which directly influences the price of
jet fuel, is currently near an eight-month low (CLc1: ), it
remains high by historical standards and therefore a burden on
the airline industry.

Kelly said the airline plans to add new cities to its
network but that it has no plans to increase its fleet until it
meets its financial targets.

“We have every desire to continue to grow. We just have to
keep our costs under control,” Kelly said.

Shares of Southwest were down 3.5 percent to $12.20 on the
New York Stock Exchange. The Arca airline index (.XAL: ) was down
2.4 percent.

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(Reporting by Kyle Peterson; Editing by Tim Dobbyn)

UPDATE 1-Southwest CEO warns of volatile fuel prices