61 of 73 new markets lose money for SWA

[Lampshade]

http://yahoo.reuters.com/news/artic...5-29_14-31-42_BNG251594&type=comktNews&rpc=44

 

[General Lee]

Atleast LBB, AMA, and MAF are winners. Nobody else wants to go in there with mainline aircraft. Congrats!

Bye Bye--General Lee

 

[learherkjay]

um, we don't serve 73 markets and we have only added 5 or 6 markets since 2003 - somebody doesn't know what they are talking about

 

[Lampshade]

I think they are talking about city pairs not cities.

 

[lowecur]

um, we don't serve 73 markets and we have only added 5 or 6 markets since 2003 - somebody doesn't know what they are talking about

Should have been new routes:


McAdoo wrote in a research report that Southwest's growth model may not be working anymore. He wrote that most of the new markets Southwest has added since early 2003 have been consistently losing money, and the carrier is depending on profits from its West Coast and Texas routes to support the rest of the system.

While Southwest has added new flights and built revenue, its profits --and stock -- have been growing more slowly, he said.
"Until Southwest takes actions to make the last four year's new flights profitable, or exits some of these markets, or substantially slows the growth, we see little hope that the shares will do other than they have over the past four years," McAdoo wrote. "Our new rating reflects our feeling that there is no reason to own the shares until we see a new direction."

I've heard Neeleman has called Herb and said there are no hard feelings. He reiterated that had his suggestions been taken seriously...SWA would not be in the predicament they are in today. Didn't DL buy back lot's of it's own stock prior to it's big defication? Of course, the pilot's should continue to hold Gary's feet to the fire. Afterall, it's mgts job to pull a rabbit out of it's hat. I say they hire Chris Angel to run things in 2008.

Should have gone with those 190's!

imp:​

 

[Widow's Son]

Swa has lost money one quarter in the last 30 years. It has never lost money two quarters in a row since it turned profitable.
If the current market is such that SWA is going to turn unprofitable then the rest are toast.
The truth is the article is an example of statistics lying. For accounting purposes, new markets get front loaded with a lot of startup expenses, marketing, advertising, tenent improvements, et-cetera. Taking over abandoned markets to grab total market share is expensive on the short term and very profitable over the long term. Fortunately, SWA can afford to be patient. The highly profitable markets in California that are supposedly carrying the system were originally started this same way and were technically losers at first. This isn't the first rodeo for the management team of SWA.

 

[mwmav8r01]

Deleted

 

[Tejas-Jet]

yaaawwwwwnnnnnnn

 

[lowecur]

Swa has lost money one quarter in the last 30 years. It has never lost money two quarters in a row since it turned profitable.
If the current market is such that SWA is going to turn unprofitable then the rest are toast.
The truth is the article is an example of statistics lying. For accounting purposes, new markets get front loaded with a lot of startup expenses, marketing, advertising, tenent improvements, et-cetera. Taking over abandoned markets to grab total market share is expensive on the short term and very profitable over the long term. Fortunately, SWA can afford to be patient. The highly profitable markets in California that are supposedly carrying the system were originally started this same way and were technically losers at first. This isn't the first rodeo for the management team of SWA.

SWA is building it's fleet as though someone is going out of business in the next few years. You think that's going to happen?

With the realization that no one's going out of business anytime soon, they will do the same thing JBLU did and actually sell off the older planes as new ones come on board. Gary has actually tried to put US Air out of business and now he has moved on to FRNT with an asterisk to weaken UAL further at IAD and DIA. Good strategy for an airline that can afford it, but past economic history for SWA is not a realistic portrait of the future as network CASM continues to climb close to the legacys without any benefit from transatlantic profits.

Patience is a great virtue, but one that SWA will be unable to afford in the next few years.

imp:​

 

[SWA GUY]

Lowecur,

The Shinola goes on the top...

 

[lowecur]

Lowecur,

The Shinola goes on the top...

OK!

Here's a more comprehensive article. Gary is doing his best impersonation of Alfred E. Newman (what me worry?).


http://www.washingtonpost.com/wp-dyn/content/article/2007/05/25/AR2007052502107_pf.html

 

[Bavarian Chef]

All my friends are leaving jb for swa, or want to leave jb for swa -- that must mean the end of swa is near.

 

[mdf]

Don't you guy's ever get tired?

Here's what it said:

"The airline continues to add aircraft at a rate of over 35 each year, even though 61 of the 73 markets added since early 2003 are consistent money-losers, the brokerage said"

Newsflash: Nothing has happened in this industry since 2000, let alone 2003. What's that number like over the same period at other airlines? Especially the ones that have had government training wheels in the form of bankruptcy protection. I think you SWA haters are need something better than this, and LBB to latch onto.

 

[AlbieF15]

Lowcur may be lost at times, but there is a sobering fact right now in the industry....

The low-hanging fruit has been grabbed. There are not many over priced city pairs waiting to be gobbled up by Airtran, SWA, and JB. Much of the growth in the east by these carriers was positioning for the day US Air died. It didn't happen. Now--there is still a lot of capacity around the east coast and yields aren't huge.

Will SWA wither away. Probably not. Will it assimilate and grow like it did in the 90s and early 00s when 9/11 put the other airlines in tailspin? I don't know. They've proven they can make money for years and years and years. I'm not pulling the plug on them yet.

But the guys hired there this year that think a 5-6 year captain's upgrade is coming may be disappointed. There's been a LOT of hiring the last 3 years, and the combination of age 60 and even modestly slowly growth could put a crimp in airline growth and advacement.

 

[YourPilotFriend]

Swa has lost money one quarter in the last 30 years. It has never lost money two quarters in a row since it turned profitable.

SW has never been non-operationally profitable since then, get your facts straight. Last year SW delivered
+$499 million operating profit
-$1.399 billion on equipment
-$809 million in stock buyback.
+ about $700 million on fuel options
total loss of $1 billion last year.
This year they are already down $500 million. They will need a loan to pay for the rest of their aircraft deliveries, or they can enter the payments into the cash flow and go into the red operationally.

 

[BVT94]

Now I remember why I hated Accounting class in college.

 

[Widow's Son]

YPF

Get your accounting right. Stock buybacks and equipment purchases are net/net BALANCE SHEET transactions. They are not part of a profit/loss statement.

Lowercur,

Yes, I think that at least one legacy carrier and one or more startup/lccs will cease existence in the next five years. It is pretty much a given. Most of the experts have alluded to it already. They really haven't changed their money losing ways, just dumped debt. Unfortunately, their debt and their pension plans was their reserve fuel. They have no reserve fuel when the next inevitable war breaks out. Once one biggie goes down, it will balance out the marketplace to the betterment of everyone else so at this point it is just a waiting game to see who falls. It could be anyone. As they say in healthcare, it isn't always the sickest patient who dies first. It could be debtor driven, it could be management driven, it could even be labor driven. Putnum pulled the plug on Braniff on a day when he had the stomach flu and didn't feel well. It just needs a catalyst which could be a war, accident, strike, failed merger, spike in interest rates, or even a combination. The only certainty is that it will happen.

 

[shearedshaft]

SW has never been non-operationally profitable since then, get your facts straight. Last year SW delivered
+$499 million operating profit
-$1.399 billion on equipment
-$809 million in stock buyback.
+ about $700 million on fuel options
total loss of $1 billion last year.
This year they are already down $500 million. They will need a loan to pay for the rest of their aircraft deliveries, or they can enter the payments into the cash flow and go into the red operationally.

Wow, Warren Buffet you aren't, that's for sure.

Where again do balance-sheet transactions enter into the above-the-line operating profit again?

Don't answer, you'll embarass yourself further.

 

[bearcat]

Swa has lost money one quarter in the last 30 years. It has never lost money two quarters in a row since it turned profitable.
If the current market is such that SWA is going to turn unprofitable then the rest are toast.
The truth is the article is an example of statistics lying. For accounting purposes, new markets get front loaded with a lot of startup expenses, marketing, advertising, tenent improvements, et-cetera. Taking over abandoned markets to grab total market share is expensive on the short term and very profitable over the long term. Fortunately, SWA can afford to be patient. The highly profitable markets in California that are supposedly carrying the system were originally started this same way and were technically losers at first. This isn't the first rodeo for the management team of SWA.

I don't agree with you....totally that is. Some airlines have ditched the domestic market and said piss off you can have it. One in particular has done nothing, but better positioned itself in international markets and new aircraft to cover the international markets because there is much less competition. That is no JB, HP, MN, etc. I think SWA is a great company, but I am curious as to how things are going to work out with the fuel prices over the next few years. I remember when SWA wasn't the elite carrier it is today. I honestly think some of the legacy carirers (I hate that term) are actually in a very good position with the international routes.....

 

[YourPilotFriend]

Wow, Warren Buffet you aren't, that's for sure.

Where again do balance-sheet transactions enter into the above-the-line operating profit again?

Don't answer, you'll embarass yourself further.

I don't even understand your question..... business purchases including aircraft are part of a corporate cash flow. If SW is out of cash on hand for paying for their liabilities they will have to take on long term debt. Certain transactions they pay cash for can't be moved into long term debt because they are ongoing expenses, i.e. advertising, perishables, etc. Southwest isn't the official carrier of the NFL for free ya know.

 

[Widow's Son]

YPF,

I wish I had met you earlier. I made about 250K last year and if I had only purchased 240k in gold coins I could have told the IRS that I only made 10K and saved myself a boatload of taxes. Damn.

Bearcat,

International flying makes money in good times and HEMMORAGES money in bad times. It's a great market and I'm sure that SWA will be cherry picking that soon, but there has to be a solid foundation to survive the inevitable world eruptions.
Did you see that President Bush today committed the USA to stopping the genocide in Darfur? The world is a powderkeg. Every major international incident since airlines began has taken airlines out with it, some quicker than others. Some regions go hot when others go cold, but all international flying backs off when there is a new international incident.
Latin America is hot right now, but Hugo Che Chavez and his marxist lapdogs can cure that in a hurry. The Orient is also hot, but Kim quite Ill can cure that one too.

 

[CA Calypso]

SW has never been non-operationally profitable since then, get your facts straight. Last year SW delivered
+$499 million operating profit
-$1.399 billion on equipment
-$809 million in stock buyback.
+ about $700 million on fuel options
total loss of $1 billion last year.
This year they are already down $500 million. They will need a loan to pay for the rest of their aircraft deliveries, or they can enter the payments into the cash flow and go into the red operationally.

Great, another pilot who is an "expert" analyzing financial statements...

 

[CA Calypso]

I don't even understand your question..... business purchases including aircraft are part of a corporate cash flow. If SW is out of cash on hand for paying for their liabilities they will have to take on long term debt. Certain transactions they pay cash for can't be moved into long term debt because they are ongoing expenses, i.e. advertising, perishables, etc. Southwest isn't the official carrier of the NFL for free ya know.

You don't understand shearedshafts' question because you have no idea what you are talking about. Study up on financial statements and pay particular attention to above the line and below the line and maybe it will become clearer.

 

[Benhuntn]

I have sold my trailer, big dish antenna, 4 dogs under the porch, my pickup truck and I am sending my wife back out on the streets. Hopefully she will pull us through this financial crisis at SWA. I am completely downsized and can't do anymore without moving in with my inlaws. Is 10 people in a 50' moblie home too many?

 

[momalley81]

SW has never been non-operationally profitable since then, get your facts straight. Last year SW delivered
+$499 million operating profit
-$1.399 billion on equipment
-$809 million in stock buyback.
+ about $700 million on fuel options
total loss of $1 billion last year.
This year they are already down $500 million. They will need a loan to pay for the rest of their aircraft deliveries, or they can enter the payments into the cash flow and go into the red operationally.

I have never read a poster on Flightinfo that is so incredibly stupid, yet talks like he honestly knows what he is talking about.

That quote above has got to be one of the dumbest and most ill-informed posts I have ever read on Flightinfo. And that is saying a lot!

 

[shearedshaft]

I don't even understand your question..... business purchases including aircraft are part of a corporate cash flow. If SW is out of cash on hand for paying for their liabilities they will have to take on long term debt. Certain transactions they pay cash for can't be moved into long term debt because they are ongoing expenses, i.e. advertising, perishables, etc. Southwest isn't the official carrier of the NFL for free ya know.

Yeah, you should have stayed quiet, this was even dumber. Are you talking "operating profit" (income statement) or are you talking cash flow (statement of cash flows). Or, are you talking debt (balance sheet). The three are related, but not in any way that you are trying to tie them together.

Look up "free cash flow" and do the math, then get back to us about your suppositions.

 

[ferlo]

SWA's stock has been sucking wind for about 5 years now...

 

[YourPilotFriend]

SWA's stock has been sucking wind for about 5 years now...

That's because it's selling rich.....$8 bucks is fair value.

 

[momalley81]

That's because it's selling rich.....$8 bucks is fair value.

And the hits just keep on coming!

 

[traffic pilot]

Guys

I am going to have to admit that I am the stupidest pilot in the business.
I read all the posts on this thread thinking I would gleen some good info or entertainment but that evil hanger witch sucked me in again.

I'm signing off for awhile. There's just nothing here for me anymore.

tp