Southwest faces $3 billion fuel bill

[Flyer1015]

The company said it would try to offset fuel costs by raising more revenue

Sadly it takes multiple management MBAs to figure that out.......

 

[Flyer1015]

Fuel is typically an airline's second-leading cost, after labor.

Um, not anymore. Fuel has topped all.

 

[satpak77]

and if fuel costs can't be cut, then guess who is next

 

[milky]

The answer would obviously be to cut any costs that you can, but more likely a company would be looking to raise the cost of tickets to pass on the cost to the customer. Maybe with all the bottom-feeders going out of business, there will be room for the industry to actually raise prices to market value.

 

[Coool Hand Luke]

SWA is already running on a bare minimum cost, what more can they control (or cut) ?

Seems I remember something about SWA running and/or owning quite a few airport fuel farms around their system. They get a piece of the pie of every gallon any airline uplifts in those cities.

 

[Jon Rivoli]

Milky said:

Maybe with all the bottom-feeders going out of business, there will be room for the industry to actually raise prices to market value.

I believe it was actually Southwest that led the charge for low airfares. Ever read "NUTS"? They used to brag about how when they entered a market the fares came down. If the planes were full, add more flights instead of raise fares. And, I personally wouldn't consider Aloha and ATA bottom-feeders.

Cheers.

 

[lrn2fly]

I got a freaking crazy idea here to fix this Airline industry problem... RAISE THE F"ING PRICE OF THE TICKETS TO REFLECT INCREASED OIL COSTS LIKE EVERY OTHER FREAKING INDUSTRY DOES!

Thank you for listening

PS: and I dont even have an MBA

 

[jonjuan]

I got a freaking crazy idea here to fix this Airline industry problem... RAISE THE F"ING PRICE OF THE TICKETS TO REFLECT INCREASED OIL COSTS LIKE EVERY OTHER FREAKING INDUSTRY DOES!

Thank you for listening

PS: and I dont even have an MBA

Southwest will just as soon as Frontier goes tits up in DEN.

 

[airlinepilot]

What SWA news release didn't say was our fuel hedges are worth (at the price of oil now) around 3 Billion this year. Right now the company expects to net (after paying for fuel) over 1.5 billion (profit). Also, we are hedged as various percentages for the next 5 years. I flew with a union guy onboard last week and he related all this. He also said alot of this "poor me" from the company is because they are getting ready to talk $$$ issues in our negotiations.

 

[canyonblue]

Dallas-based Southwest spent $2.54 billion on fuel last year, so the forecast of a $500 million increase would push the airline's 2008 fuel bill over $3 billion.

And.................

American, a unit of Fort Worth-based AMR Corp., said recently it expects to spend $9.3 billion for fuel this year, up from $6.7 billion last year.

And..................

Houston-based Continental said last month it expects its fuel bill to rise $1.5 billion in 2008.

And..................

United Airlines said it faced a $1.2 billion increase for fuel this year, and Delta Air Lines Inc. said it expected to pay $900 million more.

And..................

Northwest was budgeting for $800 million more.

Looks like this is an industry problem. Sounds like contract time at SWA. :smash:

 

[GuppyWN]

It's easy to point out the "extra expense" this year for fuel. Where's the statement about "increased revenue" from selling the hedges? Gary conveniently left that out.

Bottom line. Once again our hedge masters have earned every bit of bonus they get. If we can't afford fuel in todays market nobody is turning a blade.

Gup

 

[Cobra17]

SWA is already running on a bare minimum cost, what more can they control (or cut) ?

I think their pilots union should take out a full page ad blasting their own company and driving customers to other carriers...brilliant move!

 

[pilotyip]

I travel DTW to ABQ on a regular basis, used to use SWA all the time. But if I am planning more than three weeks in advance I can beat SWA prices on that route all the time with CAL, AAL, and NWA. Rasing prices will continue to move passengers to lower fare carriers. Short notice trips SWA seems to have an advantage.

 

[RJAA]

I am just wondering how much longer Southwest can keep up before they have to try new ways to do their business. It currently thrives on consumer's perception of "Southwest is the cheapest and always offers the best deal" Their fares are already up to where legacy carriers are and sometimes charging even more. What else can Southwest do to increase revenue when legacy carriers fight vigorouly to make up lost domestic revenue with stuff like premium traffic overseas and cargo. It's going to take a lot more than expanding to Hawaii and Mexico.

 

[CopilotDoug]

We bid each trip with the cost of fuel that day. If we don't make money, we don't fly. Old airplanes paid for, no holding cost if we don't fly. We are competing against other old airplanes, so our competitors cost is similar to ours. Fuel has gone up but we are able to pas it along to the customer.

What a novel idea! Now just tell the boneheads running the airlines.