Southwest's stock price over the past five years


I bought some Southwest stock in March 2003 (the low point on the graph, $12 a share), and sold it for $16 a share. My net earnings was $400! Over the same time period, my Boeing stock earned me $5,200 and my Skywest stock earned me $1,700. And I only invested $5,500.

It is no secret that Southwest's gains from fuel hedges have mostly been larger than their operating profits over the past several years. However, Southwest is a good company and will probably be able to weather the storm when their fuel hedges run out. Like HSLD said, they will not improve on the cost side. They will have to improve on the revenue side. Since Southwest basically has the lowest fares in the industry, their ability to raise fares will enable the legacy airlines to raise fares, and then everyone can start making money.