61 of 73 new markets lose money for SWA

[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