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Southwest Reports Net Loss Due to Fuel Hedges

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Southwest Reports Net Loss Due to Fuel Hedges

Old 10-16-2008, 04:50 AM
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Default Southwest Reports Net Loss Due to Fuel Hedges

Its getting ugly out here....

Southwest Reports Net Loss Due to Fuel Hedges - Earnings * US * News * Story - CNBC.com

Southwest Airlines reported a quarterly net loss on Thursday, reversing a year-ago profit, on charges related to its fuel hedging program.

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The low-cost airline's third-quarter net loss amounted to $120, or 16 cents per share, compared with a profit of $162 million, or 22 cents per share, a year earlier.
Excluding one-time items, Southwest earned $69 million, or 9 cents per share, beating the average Wall Street estimate of 7 cents per share, according to Reuters Estimates.
The airline industry has been severely battered this year by soaring fuel costs that peeked at a record high in July before falling rapidly.
Southwest, cnbc_comboQuoteMove('popup_LUV_ID0EDAAC15839609');[LUV 11.56 -0.76 (-6.17%) ]cnbc_quoteComponent_init_getData("LUV","WSODQ_COMP ONENT_LUV_ID0EDAAC15839609","WSODQ","true","ID0EDA AC15839609","off","false","inLineQuote"); whose fuel hedges are the envy of the industry, was somewhat insulated from the spike in fuel prices but reported charges of $247 million related to adjustments on a portion of the future period of its hedge portfolio.
The airline's revenue rose about 12 percent to $2.9 billion. The company ended the quarter with $3.4 billion in cash and short term investments.


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Old 10-16-2008, 05:04 AM
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This CAN'T be true. SWA will NEVER lose money according to some on this forum.............. Welcome to the party guys.............

And NO, I don't hate SWA.... I have a lot of good friends there. It's just that many thought this day would never come.....and low and behold, it did. (At least the numbers aren't that bad....yet). Kinda like getting sucker punched, isn't it?

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Old 10-16-2008, 05:12 AM
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It is a sad day when even SWA cannot make money in this business.
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Old 10-16-2008, 05:31 AM
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Originally Posted by acl65pilot View Post
It is a sad day when even SWA cannot make money in this business.
Yep, it sure is................. and even though oil has dropped dramatically, the economy sure isn't going to be producing passengers like it used to. Looks like fares will HAVE to drop if we expect any passengers for the holiday season.
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Old 10-16-2008, 05:55 AM
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Its just a paper loss, excluding "accounting charges" it is still a 69 million dollar profit

http://www.nytimes.com/2008/10/17/bu...3E%3C/TABLE%3E
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Old 10-16-2008, 06:00 AM
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Still a drop in the bucket compared to what some other carriers have lost
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Old 10-16-2008, 06:05 AM
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Originally Posted by fit29 View Post
Its just a paper loss, excluding "accounting charges" it is still a 69 million dollar profit

http://www.nytimes.com/2008/10/17/bu...3E%3C/TABLE%3E
Can all the other airlines exclude "accounting charges" when reporting profits/losses to their investors?
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Old 10-16-2008, 06:09 AM
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Its not actually a paper loss in this case. It is a actual loss dealing with fuel hedges. Other airlines are also taking losses on fuel hedges. Any fuel you have hedged above 75 a barrel is now underwater and a liability for accounting purposes. A paper loss would be something like a writedown in good will value of the airline based on declining stock value. Hedges are a two way street. You make money when fuel goes up and you lose money when fuel goes down. Its real not paper money.
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Old 10-16-2008, 06:23 AM
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The main thing is that SWA still made money from its operations.that means SWA still makes money flying airplanes....who else has been able to do that?????anyone?bueller???....
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Old 10-16-2008, 06:26 AM
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Regardless, it still says "LOSS", not "PROFIT". If they had shown a "PROFIT", I'm sure they'd have said so, especially so as not to ruin their perfect run of profitable quarters, don't you think?
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