Tammy Romo
Executive Vice President and Chief Financial Officer at Southwest Airlines
All right. Hello, everyone, and thank you, Bob. I've worked with Bob for a long time and I agree with Gary, he is going to be a great CEO. And my friend, Gary Kelly, you are amazing and I just want to thank you for all that you've done for our company and for all of us and for all of our shareholders. And I'm not going to say anything else because I will get choked up.
So, instead, I'm going to provide a quick overview of our financial results and share some additional color on our outlook beyond what we provided in our press release to you all this morning. And I also just want to thank our employees for their incredible resilience as we manage through this dynamic environment. It is their hard work, dedication and focus that enabled us to achieve an important milestone in our recovery with our first quarterly profit since the pandemic began.
We reported a $68 million profit in fourth quarter or $0.11 per diluted share and excluding special items, we reported an $85 million profit or $0.14 per diluted share. As Bob mentioned, our fourth quarter profit was driven by strong leisure demand during the holidays, business travel momentum and incremental revenue from our new co-brand credit card agreement with Chase.
Our fourth quarter results were all within the guidance ranges provided last month at Investor Day. For full-year 2021, our net income was $977 million or $1.61 per diluted share, driven by $2.7 billion of Payroll Support Program proceeds, excluding this temporary benefit to salary wages and benefits expense and other smaller special items, our full year net loss was $1.3 billion or a $2.15 loss per diluted share. Andrew will cover our revenue trends and outlook here in a minute.
Taking a look at cost. We continue to experience inflationary cost pressure experienced in fourth quarter, primarily in salary wages and benefits and airport cost as expected. A portion relates to hiring and we made great strides toward our hiring efforts in 2021 and remain on track with plans this year. And, of course, the labor market continues to be a challenge, which continues to pressure wage rates across the board.
Since Investor Day, we have experienced additional cost pressures related to omicron and winter weather. As a result, our first quarter unit cost inflation compared with first quarter 2019 and excluding fuel, special items, and profit sharing, have increased about 10 points. Roughly half of that increase is driven by the $150 million of additional incentive pay, we are offering to operations employees through early February and the other half is associated with buying fewer ASMs than we were planning.
In light of the significant impact from the omicron wave on available staffing, extending the temporary incentive pay and further reducing our capacity were necessary steps to stabilize the operations. Aside from these impacts, we would be on track with our previous unit cost outlook. Market fuel prices have continued to rise here, which also resulted in a $0.10 increase in our fuel cost per gallon guidance. Our estimated first quarter fuel price in the $2.25 to $2.35 per gallon range is also roughly $0.25 higher than our first quarter 2019 fuel price and that's inclusive of an estimated $0.35 of hedging gains here in the first quarter.
Turning to our full year guidance, at Investor Day, we were planning for capacity to be roughly flat versus 2019 levels with no material impact from the omicron variant on either revenues or costs at that time. Fast forward to today, the impact from the omicron variant on available staffing has led us to reevaluate our first half 2022 capacity plans, in particular, March through May. Our planned flight schedule adjustments take some capacity upside optimism off the table for this year and reduces our full-year 2022 capacity outlook by about 4 points from roughly flat to down 4% versus 2019.
I've already covered the $150 million of additional incentive pay in the first quarter and in order to be more competitive on the hiring front, in particular for ground operations, we are raising starting wage rates from $15 per hour to $17 per hour, which is estimated to be a $20 million to $25 million total impact to this year. And of course we have contemplated labor rate inflation in our guidance as best we can for this year, understanding about the market is somewhat uncertain.
This is clearly not where we hope to be along our recovery curve nearly two years into this pandemic, but we are making great progress. While we must remain nimble in this environment and take the necessary actions to take care of our employees and provide a reliable product for our customers, we are very focused on the long term and determined to get back to 2018 levels of productivity and efficiency as we shared with you all at Investor Day. As Bob said, our goal is to get there by the end of next year.
Although it is early, based on our current plan for 2022 and preliminary plan for 2023, we expect 2023 CASM-Ex will decline year-over-year compared with 2022. Longer term, our framework that we provided at Investor Day remains unchanged and that includes a post pandemic target a mid single-digit ASM growth accompanied by low single digit CASM-Ex growth. I want to be clear that our longer term CASM-Ex framework includes an estimate for labor rate increases as best we can estimate today.
Turning to fleet, we currently have 77 MAX from orders and 37 MAX options with Boeing this year, while our plan assumes, we will exercise the remaining 37 options this year. We maintain the flexibility to evaluate that intention as decision points arise. We continue to believe that taking the additional options this year will yield a positive NPV on aircraft replacement if we don't deploy them in the network.
As I have mentioned to you all before, we won't incur a material CASM-Ex penalty from holding on onto extra aircraft in the event we temporarily park them of our Dash 700s, while capacity is moderated this year. As we work our way back to an efficient utilization of the fleet, we remain in the fortunate position to have the flexibility needed with our retirement plans without a financial penalty.
I'll wrap up with a quick note on our balance sheet strength. We ended 2021 with liquidity of $16.5 billion. Our leverage is at a very manageable 54% and we continue to be the only U.S. airline with an investment grade rating by all three rating agencies, which I believe is one of our key competitive advantages. We have ample liquidity that allows us for further cushion in the event of further COVID wave. Overall, our balance sheet strength puts us in a category of one in terms of our ability to withstand shocks and remain financially healthy.
With that, I will turn it over to Andrew.
