SWA Fuel cost to jump 20% to $3-Billion
04-11-2008, 06:55 PM
#1
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SWA Fuel cost to jump 20% to $3-Billion
Southwest says fuel bill will jump 20 percent, to $3 billion
AP ONLINE
Posted: 2008-04-11 14:41:00
DALLAS (AP) - Southwest Airlines Co. says its 2008 fuel bill will rise more than $500 million - nearly equal to its entire profit last year.
In a regulatory filing Thursday, Southwest comments echoed recent similar forecasts of higher fuel costs from American Airlines and Continental Airlines Inc. and underscored the industry's vulnerability to rising oil prices.
Dallas-based Southwest spent $2.54 billion on fuel last year, so the forecast of a $500 million increase would push the airline's 2008 fuel bill over $3 billion.
The company said it would try to offset fuel costs by raising more revenue and controlling other costs.
For several years, Southwest has benefited from fuel hedging. Southwest has paid upfront for the right to buy fuel at certain prices. When fuel prices began rising earlier this decade, Southwest was able to lock in below-market prices for most of its fuel.
While still less than what rivals pay, Southwest's average fuel price has risen from 72 cents per gallon in 2003 to $1.70 per gallon last year.
Southwest has hedged 70 percent of its 2008 fuel needs at the equivalent of $51 per barrel for crude oil - less than half the current price of oil.
American, a unit of Fort Worth-based AMR Corp., said recently it expects to spend $9.3 billion for fuel this year, up from $6.7 billion last year.
Houston-based Continental said last month it expects its fuel bill to rise $1.5 billion in 2008. Chief financial officer Jeff Misner said the airline couldn't raise fares quickly enough to cover the cost of fuel.
United Airlines said it faced a $1.2 billion increase for fuel this year, and Delta Air Lines Inc. said it expected to pay $900 million more. Northwest was budgeting for $800 million more.
Fuel is typically an airline's second-leading cost, after labor. Airlines are trying to offset surging fuel prices by reducing flights, trying to raise fares, and adding new charges, like fees to check a second bag.
AP ONLINE
Posted: 2008-04-11 14:41:00
DALLAS (AP) - Southwest Airlines Co. says its 2008 fuel bill will rise more than $500 million - nearly equal to its entire profit last year.
In a regulatory filing Thursday, Southwest comments echoed recent similar forecasts of higher fuel costs from American Airlines and Continental Airlines Inc. and underscored the industry's vulnerability to rising oil prices.
Dallas-based Southwest spent $2.54 billion on fuel last year, so the forecast of a $500 million increase would push the airline's 2008 fuel bill over $3 billion.
The company said it would try to offset fuel costs by raising more revenue and controlling other costs.
For several years, Southwest has benefited from fuel hedging. Southwest has paid upfront for the right to buy fuel at certain prices. When fuel prices began rising earlier this decade, Southwest was able to lock in below-market prices for most of its fuel.
While still less than what rivals pay, Southwest's average fuel price has risen from 72 cents per gallon in 2003 to $1.70 per gallon last year.
Southwest has hedged 70 percent of its 2008 fuel needs at the equivalent of $51 per barrel for crude oil - less than half the current price of oil.
American, a unit of Fort Worth-based AMR Corp., said recently it expects to spend $9.3 billion for fuel this year, up from $6.7 billion last year.
Houston-based Continental said last month it expects its fuel bill to rise $1.5 billion in 2008. Chief financial officer Jeff Misner said the airline couldn't raise fares quickly enough to cover the cost of fuel.
United Airlines said it faced a $1.2 billion increase for fuel this year, and Delta Air Lines Inc. said it expected to pay $900 million more. Northwest was budgeting for $800 million more.
Fuel is typically an airline's second-leading cost, after labor. Airlines are trying to offset surging fuel prices by reducing flights, trying to raise fares, and adding new charges, like fees to check a second bag.
04-11-2008, 07:08 PM
#3
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Originally Posted by The Duke
So, in other words, WN is hurting, but all the other carriers must be hurting a whole lot worse because they don't have the same % of fuel hedged.
And yes, agreed, the picture does look a bit crappy!?...
04-11-2008, 08:07 PM
#4
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Had to post this in here also. From a thread I just started. Don't let these bastards play with your money.
From CAL website. Including Mainline and regional flying, 450 million gallons of jet fuel per year. Price from 4th quarter 2007= $2.35/gal including the 10% hedges. Price today from Coair website. 3.37/ gallon. BTW, that is at the highest level it has been this month. Makes a difference of $515,000,000 if fuel prices stay that high. This does not take into account ticket prices that have been going up or anything else. So, what this means if we didn't change a thing from last year, the company would make no profit. Still a lot of revenue, just no profit. BTW, we have $3 billion, yes billion in unrestriced cash. From the other article about Southwest, CAL states their fuel price will go up by 1.5 billion dollars. I don't know who their forecasters are, but seems to me their math sucks. And if they are expecting fuel to rise that much, why don't they hedge all of our fuel for the year with half the unrestriced cash at todays price??? Don't let them bull**** us into taking ****ty contracts or thinking they are hurting that bad. They are trying to pull a fast one on all of us. Stand tall get the pay raises and let them raise the darn ticket prices like they should!! That goes for all the pilots out there.
From CAL website. Including Mainline and regional flying, 450 million gallons of jet fuel per year. Price from 4th quarter 2007= $2.35/gal including the 10% hedges. Price today from Coair website. 3.37/ gallon. BTW, that is at the highest level it has been this month. Makes a difference of $515,000,000 if fuel prices stay that high. This does not take into account ticket prices that have been going up or anything else. So, what this means if we didn't change a thing from last year, the company would make no profit. Still a lot of revenue, just no profit. BTW, we have $3 billion, yes billion in unrestriced cash. From the other article about Southwest, CAL states their fuel price will go up by 1.5 billion dollars. I don't know who their forecasters are, but seems to me their math sucks. And if they are expecting fuel to rise that much, why don't they hedge all of our fuel for the year with half the unrestriced cash at todays price??? Don't let them bull**** us into taking ****ty contracts or thinking they are hurting that bad. They are trying to pull a fast one on all of us. Stand tall get the pay raises and let them raise the darn ticket prices like they should!! That goes for all the pilots out there.
Last edited by reCALcitrant; 04-11-2008 at 08:57 PM.
04-12-2008, 05:09 AM
#6
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Originally Posted by Sir James
I think SWA will have their first quarterly loss this year. It's bad everywhere, even for them.
04-12-2008, 05:52 AM
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Anyone have an idea of how many passengers SWA carries in a year? I was thinking fuel surcharge to off-set fuel costs; X-number of dollars per ticket to make-up for the lost revenue due to high oil prices? After all, people are not going to stop flying; their still driving with fuel well over 3 dollars a gallon?!
04-12-2008, 05:57 AM
#8
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Originally Posted by MILPILOT17
Anyone have an idea of how many passengers SWA carries in a year? I was thinking fuel surcharge to off-set fuel costs; X-number of dollars per ticket to make-up for the lost revenue due to high oil prices? After all, people are not going to stop flying; their still driving with fuel well over 3 dollars a gallon?!
2006 Financial Statistics:
- Net income: $499 million
- Total passengers carried: 96.3 million
- Total RPMs: 67.7 billion
- Passenger load factor: 73.1 percent
- Total operating revenue: $9.1 billion
04-12-2008, 07:33 AM
#10
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Originally Posted by Sir James
I think SWA will have their first quarterly loss this year. It's bad everywhere, even for them.
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