SWA profits WITHOUT fuel hedging.
07-20-2006 | 04:12 PM
#21
Gets Weekends Off
Joined: Apr 2006
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Maybe this will clear it up for him....simple language...
Lynn Thomasson | Sentinel Staff Writer
Posted July 20, 2006
PHOTOS
Southwest Airlines
Southwest Airlines (DONNA MCWILLIAM, ASSOCIATED PRESS)
Jul 17, 2006
ON THE WEB
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Southwest Airlines soared in the second quarter on robust demand, higher ticket prices and a savvy fuel strategy, more than doubling its profit from last year.
Net income increased from $144 million in the second quarter of 2005 to $333 million this quarter -- a jump from 18 cents to 40 cents per diluted share, the airline announced Wednesday.
Southwest CEO Gary Kelly attributed the success to reduced capacity by competitors, strong demand, and the low-cost airline's ability to offset high fuel prices using hedges, a tool that helps insulate the company from the current high oil prices.
Excluding gains from hedging its fuel purchases, the company said, it earned $273 million, or 33 cents per share in the most-recent quarter.
Lynn Thomasson | Sentinel Staff Writer
Posted July 20, 2006
PHOTOS
Southwest Airlines
Southwest Airlines (DONNA MCWILLIAM, ASSOCIATED PRESS)
Jul 17, 2006
ON THE WEB
Check Southwest Airlines stock quote
ADVERTISEMENTS
Southwest Airlines soared in the second quarter on robust demand, higher ticket prices and a savvy fuel strategy, more than doubling its profit from last year.
Net income increased from $144 million in the second quarter of 2005 to $333 million this quarter -- a jump from 18 cents to 40 cents per diluted share, the airline announced Wednesday.
Southwest CEO Gary Kelly attributed the success to reduced capacity by competitors, strong demand, and the low-cost airline's ability to offset high fuel prices using hedges, a tool that helps insulate the company from the current high oil prices.
Excluding gains from hedging its fuel purchases, the company said, it earned $273 million, or 33 cents per share in the most-recent quarter.
07-21-2006 | 10:42 AM
#26
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Joined: May 2005
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From: 767 FO
Directly From the Dallas Morning News 07/21/06:
Southwest said it earned $333 million, or 40 cents a share, in the three months ended June 30.
That compares with earnings of $144 million, or 18 cents, in the same quarter of 2005.
The earnings bested Southwest's previous record of $246 million, set in the second quarter of 2003.
Excluding gains from accounting changes, Southwest earned $273 million last quarter, or 33 cents a share, above the 26-cent consensus estimate from analysts surveyed by Thomson Financial.
Southwest's aggressive fuel hedging program earned the carrier $198 million during the quarter.
Even so, its adjusted fuel costs increased from $330 million to $518 million.
Southwest senior vice president and chief financial officer Laura Wright said the carrier was 77 percent hedged in the second quarter at $36 a barrel – about half the current market price.
In the third quarter, Southwest has 74 percent of its needs hedged at the same price.
How it is reads, at least from the Dallas Morning News, is that Southwest would have netted $75 million for the second quarter ($273 - $198) without their fuel hedging program. Though hedged in 2008, I believe the bulk of Southwest’s hedges run out in 2007. The latest numbers I have for 2007 is 60% hedged at $38.
Still a solid quarter given the current environment. It’s great to see the industry taking a turn for the better.
AA767AV8TOR
Southwest said it earned $333 million, or 40 cents a share, in the three months ended June 30.
That compares with earnings of $144 million, or 18 cents, in the same quarter of 2005.
The earnings bested Southwest's previous record of $246 million, set in the second quarter of 2003.
Excluding gains from accounting changes, Southwest earned $273 million last quarter, or 33 cents a share, above the 26-cent consensus estimate from analysts surveyed by Thomson Financial.
Southwest's aggressive fuel hedging program earned the carrier $198 million during the quarter.
Even so, its adjusted fuel costs increased from $330 million to $518 million.
Southwest senior vice president and chief financial officer Laura Wright said the carrier was 77 percent hedged in the second quarter at $36 a barrel – about half the current market price.
In the third quarter, Southwest has 74 percent of its needs hedged at the same price.
How it is reads, at least from the Dallas Morning News, is that Southwest would have netted $75 million for the second quarter ($273 - $198) without their fuel hedging program. Though hedged in 2008, I believe the bulk of Southwest’s hedges run out in 2007. The latest numbers I have for 2007 is 60% hedged at $38.
Still a solid quarter given the current environment. It’s great to see the industry taking a turn for the better.
AA767AV8TOR
07-21-2006 | 03:12 PM
#28
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Joined: Feb 2006
Posts: 82
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From: B-737 F/O
Got more info for the thread about the fuel hedges. I'm currently in new hire SWA training and we heard from the finance guys about the earnings report. The "excluding SFAS 133 fuel hedge" stuff means that there is a $ amount given to the unrealized value of future fuel hedges that Southwest has in place. Kind of like when your house appreciates in value it is worth more, but you don't really make a cent until you sell it. Not sure who determines this $ amount, but it is really just a paper gain. So, Southwest subtracted this out of their earnings and came up with $273M. Southwest absolutely exercised fuel options second quarter - $225M. So, those that said without the hedges Southwest would have earned $48M are correct.
Gary Kelly also spoke to us (new hires, upgrades, recurrent, instructors, etc.) today at the training center and he quoted these same numbers.
Gary Kelly also spoke to us (new hires, upgrades, recurrent, instructors, etc.) today at the training center and he quoted these same numbers.
07-21-2006 | 05:18 PM
#29
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Joined: May 2005
Posts: 44
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From: 767 FO
Originally Posted by grumman
Got more info for the thread about the fuel hedges. I'm currently in new hire SWA training and we heard from the finance guys about the earnings report. The "excluding SFAS 133 fuel hedge" stuff means that there is a $ amount given to the unrealized value of future fuel hedges that Southwest has in place. Kind of like when your house appreciates in value it is worth more, but you don't really make a cent until you sell it. Not sure who determines this $ amount, but it is really just a paper gain. So, Southwest subtracted this out of their earnings and came up with $273M. Southwest absolutely exercised fuel options second quarter - $225M. So, those that said without the hedges Southwest would have earned $48M are correct.
Gary Kelly also spoke to us (new hires, upgrades, recurrent, instructors, etc.) today at the training center and he quoted these same numbers.
Gary Kelly also spoke to us (new hires, upgrades, recurrent, instructors, etc.) today at the training center and he quoted these same numbers.
Gruman,
Thanks for clearing that up. All you guys need to know the numbers and your hedges when going into negotiations. The rest of the industry is looking real close at your hedges.
Don't forget to negotiate an adequate retirement package this next round of negotiations!!
Congrats on the new job and keep the dirty side down!!
AA767AV8TOR
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