Originally Posted by
Sasquatch
I think Southwest will still-- despite the hedgehogs-- post its first quarterly loss ever in 2008.
IIRC, Southwest has posted quarterly losses before, they just have never had a losing fiscal year. That's what they are referring to when they say that they have had 30 some years of profitability.
Originally Posted by
dingo222
the biggest benefit is not having to buy fuel on the spot market and absorbing the spike in fuel costs.
Spanky did a good job explaining how hedging works. It is a cash transaction that really has nothing to do with jet fuel and is more a bet than anything else.
SW "bets" that fuel (heating oil) will be at or more a price on a certain date, someone else bets that it will be less. It's less, SW pays the difference, more the other person pays the difference.
Southwest still buys fuel at the spot price at every airport they fly to.
If they didn't, why would they tanker fuel from one part of the country to another?