Ok, Recently I have been saying that Southwest has been able to lead the industry primarily because of fuel hedges. That does not imply that Southwest is not more efficient than others, it simply implies that they have an advantage from fuel hedges. Furthermore, when those hedges run out, Southwest will no longer be invincible, and pilot salaries will probably be number one on the expense trimming sheet.
After arguing this point with many, today I found the actual evidence that I knew existed all along:
Southwest's 4th Quarter profit = $86 million dollars
Southwest's 4th Quarter fuel hedging savings = $258 million dollarsa
86-258 = $172 million dollar operating loss (Without fuel hedges)
Now I think it was a good decision by Southwest to hedge fuel prices, and it is the primary (actually the only) reason I bought their stock in 2003. But the fact remains that those run out soon, and Southwest who has barely been turning a profit will soon be losing money, and needing to cut expenses.
See this website for the evidence.
http://news.moneycentral.msn.com/tic...&Symbol=US:AMR