SWA posts $140M 3Q loss due to hedging
10-20-2011 | 04:51 AM
#1
Thread Starter
On Reserve
Joined: Jul 2008
Posts: 1,886
Likes: 0
From: MSP7ERB
SWA posts $140M 3Q loss due to hedging
Southwest Says Profit Excluding Jet-Fuel Hedging Costs Fell 37% - Bloomberg
Southwest Says Profit Excluding Jet-Fuel Hedging Costs Fell 37%
By Mary Schlangenstein - Oct 20, 2011 6:44 AM CT
Southwest Airlines Co. (LUV) said third- quarter profit excluding hedging costs fell 37 percent as rising fuel bills damped the benefit of more passengers and higher fares.
Earnings without the hedging expense slid to $122 million, or 15 cents a share, Southwest said today. Analysts expected profit on that basis of 14 cents a share, the average of 16 estimates compiled by Bloomberg. When hedging costs are accounted for, the result was a $140 million net loss.
The period marked the first full quarter since Dallas-based Southwest purchased AirTran Holdings Inc. in May to help boost sales. Spending on fuel increased last quarter, and Southwest has said it is trimming some routes because they are no longer profitable.
“Despite the cautious economic outlook, our booking trends remain strong,” Chief Executive Officer Gary Kelly said in a statement. “Importantly, business travel has remained stable since spring.”
Sales rose 35 percent to $4.3 billion. Southwest said it had costs of $262 million that included accounting for fuel price contracts and the AirTran acquisition.
Including those items, the net loss of 18 cents a share compared with net income of $205 million, or 27 cents, a year earlier. The 2010 quarter included a $10 million gain tied to accounting for fuel hedging contracts. Profit a year earlier was $195 million, or 26 cents a share.
Traffic, measured by the number of miles flown by paying passengers, rose 5.3 percent last quarter, Southwest said on Oct. 7. The airline said today that average fares increased 7.4 percent to $142.31.
Southwest joined other carriers in August by slowing growth in seating capacity this year, to a range of 4 percent to 5 percent from a plan of as much as 6 percent. Available seating will be unchanged or down slightly in 2012 amid higher fuel costs and a faltering economic recovery, Southwest has said.
The airline began a nationwide sale this week with one-way fares as low as $35 to boost traffic during the traditionally slow travel period between Thanksgiving and Christmas and in early 2012.
Southwest followed American Airlines parent AMR Corp. (AMR) in releasing third-quarter financial results, with other major carriers reporting next week. AMR posted a $162 million loss.
Southwest Says Profit Excluding Jet-Fuel Hedging Costs Fell 37%
By Mary Schlangenstein - Oct 20, 2011 6:44 AM CT
Southwest Airlines Co. (LUV) said third- quarter profit excluding hedging costs fell 37 percent as rising fuel bills damped the benefit of more passengers and higher fares.
Earnings without the hedging expense slid to $122 million, or 15 cents a share, Southwest said today. Analysts expected profit on that basis of 14 cents a share, the average of 16 estimates compiled by Bloomberg. When hedging costs are accounted for, the result was a $140 million net loss.
The period marked the first full quarter since Dallas-based Southwest purchased AirTran Holdings Inc. in May to help boost sales. Spending on fuel increased last quarter, and Southwest has said it is trimming some routes because they are no longer profitable.
“Despite the cautious economic outlook, our booking trends remain strong,” Chief Executive Officer Gary Kelly said in a statement. “Importantly, business travel has remained stable since spring.”
Sales rose 35 percent to $4.3 billion. Southwest said it had costs of $262 million that included accounting for fuel price contracts and the AirTran acquisition.
Including those items, the net loss of 18 cents a share compared with net income of $205 million, or 27 cents, a year earlier. The 2010 quarter included a $10 million gain tied to accounting for fuel hedging contracts. Profit a year earlier was $195 million, or 26 cents a share.
Traffic, measured by the number of miles flown by paying passengers, rose 5.3 percent last quarter, Southwest said on Oct. 7. The airline said today that average fares increased 7.4 percent to $142.31.
Southwest joined other carriers in August by slowing growth in seating capacity this year, to a range of 4 percent to 5 percent from a plan of as much as 6 percent. Available seating will be unchanged or down slightly in 2012 amid higher fuel costs and a faltering economic recovery, Southwest has said.
The airline began a nationwide sale this week with one-way fares as low as $35 to boost traffic during the traditionally slow travel period between Thanksgiving and Christmas and in early 2012.
Southwest followed American Airlines parent AMR Corp. (AMR) in releasing third-quarter financial results, with other major carriers reporting next week. AMR posted a $162 million loss.
10-20-2011 | 07:47 AM
#4
:-)
Joined: Feb 2007
Posts: 7,339
Likes: 0
This is completely the fault of our government.
10-20-2011 | 08:31 AM
#6
Gets Weekends Off
Joined: Jul 2010
Posts: 1,673
Likes: 0
From: 7er
I think you got it backwards. SWA has the highest labor costs in the industry so I don't see how it has anything to do with SWA "wages not keeping up with inflation" I have jumped on SWA a few times this summer and the planes were only 1/2 full. At least they still have their culture, for now.
10-20-2011 | 10:00 AM
#10
Line Holder
Joined: Oct 2010
Posts: 733
Likes: 26
Excerpt from Gary Kelly's Employee Newsline today:
Back to the earnings. You will note some headlines in the media that say that we have a net loss. That is because, for SEC purposes, we are required to mark our fuel hedge portfolio to market, and of course there are wild swings in energy prices. We and Wall Street don’t take that into account in the way that we manage our business because those hedges are out there for future years. And fuel prices are going to fluctuate all over the place before those hedges ultimately close. So I’m not worried about that, I would just urge you all to focus on the performance excluding those items as we always do.
Stock is up 5% right now in today's trading....
Back to the earnings. You will note some headlines in the media that say that we have a net loss. That is because, for SEC purposes, we are required to mark our fuel hedge portfolio to market, and of course there are wild swings in energy prices. We and Wall Street don’t take that into account in the way that we manage our business because those hedges are out there for future years. And fuel prices are going to fluctuate all over the place before those hedges ultimately close. So I’m not worried about that, I would just urge you all to focus on the performance excluding those items as we always do.
Stock is up 5% right now in today's trading....
Thread
Thread Starter
Forum
Replies
Last Post
