Sir,

Tough call. SW business model is one that will allow them to stay around indefinitely, however, they will have some core issues to deal
with. I think the fact that they raised fares from $3-10 shows
they are starting to feel the pinch of expiring fuel hedges, industry
leading narrow-body pay, and labor unrest. As they are the Walmart of the aviation industry they set the tone for minimum fares. As of today I think oil is about $57/brl so they are fine with their current positions. I think, however, more fare increases are around the corner and possibly more labor unrest amongst their cabin crew. I also think that as the economy slowly rebounds people will opt more to legacy carriers with their more vast networks.

I think also their pilots receive extra pay for coming in under block which helps greatly with their patented quick turns. I suspect that they will revise that in the future as, and I'm guessing here, it leads to high fuel costs. It'll be interesting to see the slight fare increases they will have to implement over the coming years to stay profitable, but this only helps the legacy carriers. Management over there is to wise to ever let the sheets dip into the red. I doubt they will ever see an unprofitable quarter but one never knows.

J