SWA 2Q Profit Falls
07-19-2007, 05:45 PM
#11
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Position: 737 Left Seat
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Originally Posted by Oldfreightdawg
Like I said, I wouldn't. I'm not picking on SWA, I wish every airline had their management talent and prospects. My point is they have a revenue problem, not a fuel cost problem, and they know it. My guess is they will fix it. If they don't, and yields continue to fall, then I'd worry.
The domestic market has gone south a bit - don't know how long it'll take to change. If it continues to be slow, look for international flights from SWA sooner rather than later.
07-19-2007, 07:15 PM
#12
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Joined APC: Apr 2006
Position: 737 CA
Posts: 2,750
Originally Posted by kalymnos
oh my lord... 60 or so straight quarters of profitability, and you think an airline with 12B in cash is getting into a bind.....pilots ARE stupid
07-20-2007, 03:49 AM
#15
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JetJock - Please expound on your statement with numbers explaining how SWA would be losing money without hedges and tell me exactly when SWA's hedges expire. Thanks. As an advanced warning, I don't think you know what you're talking about.
07-20-2007, 06:01 AM
#16
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Originally Posted by de727ups
I don't think kalymnos's post reaches the flamebait threshold. Not even close.
It would be great if you could discuss this without the name calling.
Thanks.
The management.
It would be great if you could discuss this without the name calling.
Thanks.
The management.
07-20-2007, 06:39 AM
#17
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Joined APC: Dec 2005
Position: FO, looking left
Posts: 1,057
Some facts:
2007: 95% hedged at $50/barrel;
2008: 65% hedged at $49/barrel;
2009 over 50% hedged at $51/barrel;
2010 over 25% hedged at $63/barrel;
2011 over 15% hedged at $64/barrel;
2012 15% hedged at $63/barrel.
Current price for oil:
$75.84/barrel
It is no secret that if you take Southwest's quartlerly profit minus the gains from fuel hedging, you would show a quarterly loss. I personally have done this math probably every quarter since 2005.
This is all fact.
Now for commentary:
Personally, no one would be happier than me if Southwest continued to make a profit for another 100 consecutive quarters. My biggest problem with Southwest over the past years is they have used this advantage to lower their ticket prices. If Southwest has such a good product (on time, no bs, friendly customer service, etc...), then why don't they charge the same fares as the rest of the airlines and make a higher profit. Instead, they have undercut prices because of their fuel hedges. Fuel is an airlines largest expense, and Southwest has been able to pay between 35% and 60% of the price for jet fuel compared to market value.
When the hedges run out, will Southwest be in trouble? No. They will just have to raise prices and have fares the same as other airlines. Then ideally their good company model (common fleet, quick turns, on time airports, and friendly customer service) will continue to make them a profit. However, it is the other airlines that will benefit greatly from Southwest's higher fares. They will be able to return to steady profitability.
No matter what I ever say about Southwest, there are always the people who work there who will take shots at me. So... flack jackets are on. Fire away!
2007: 95% hedged at $50/barrel;
2008: 65% hedged at $49/barrel;
2009 over 50% hedged at $51/barrel;
2010 over 25% hedged at $63/barrel;
2011 over 15% hedged at $64/barrel;
2012 15% hedged at $63/barrel.
Current price for oil:
$75.84/barrel
It is no secret that if you take Southwest's quartlerly profit minus the gains from fuel hedging, you would show a quarterly loss. I personally have done this math probably every quarter since 2005.
This is all fact.
Now for commentary:
Personally, no one would be happier than me if Southwest continued to make a profit for another 100 consecutive quarters. My biggest problem with Southwest over the past years is they have used this advantage to lower their ticket prices. If Southwest has such a good product (on time, no bs, friendly customer service, etc...), then why don't they charge the same fares as the rest of the airlines and make a higher profit. Instead, they have undercut prices because of their fuel hedges. Fuel is an airlines largest expense, and Southwest has been able to pay between 35% and 60% of the price for jet fuel compared to market value.
When the hedges run out, will Southwest be in trouble? No. They will just have to raise prices and have fares the same as other airlines. Then ideally their good company model (common fleet, quick turns, on time airports, and friendly customer service) will continue to make them a profit. However, it is the other airlines that will benefit greatly from Southwest's higher fares. They will be able to return to steady profitability.
No matter what I ever say about Southwest, there are always the people who work there who will take shots at me. So... flack jackets are on. Fire away!
07-20-2007, 06:50 AM
#18
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Joined APC: Dec 2005
Position: B737
Posts: 80
It is no secret that if you take Southwest's quartlerly profit minus the gains from fuel hedging, you would show a quarterly loss. I personally have done this math probably every quarter since 2005.
Don't be so sure on this....
Liars figure and figures lie...........there are many ways to manipulate a balance sheet.
(Since SWA's fuel "cost" (SWA pays the same for Jet A as every one else) has increased due to recently declining hedges the company has found ways to offset that loss gradually: prices, productivity, cuts, etc...)
07-20-2007, 06:54 AM
#19
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Position: B737
Posts: 80
My biggest problem with Southwest over the past years is they have used this advantage to lower their ticket prices.
Uh, excuse me but this is called business......
Do some research and you will find out that we have raised prices over three times this year alone....
Don't hate the player, hate the game.
07-20-2007, 09:52 AM
#20
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Joined APC: Apr 2007
Posts: 145
lets say that they use the market cap to leverage debt...how much do you think this airline is worth and as a side note do you realize that ALL LUV airplanes are paid with cash..remember, financial geeks looking to turn a profit on large funds and the garbage they spew is no real indication on how a comapany like LUV is doing..LUV is in a perfect position to do anything they please al long as no congessmans district is hurt..."slow and steady is the turtle"
p.s. not all pilots are stupid..just some are more stupid than others..joking...
p.s. not all pilots are stupid..just some are more stupid than others..joking...
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