Southwest Airlines Reports Loss

[weasel_lips]

Southwest Reports Net Loss Due to Fuel Hedges
Companies:Southwest Airlines Co


By Reuters | 16 Oct 2008 | 07:10 AM ET

Southwest Airlines reported a quarterly net loss on Thursday, reversing a year-ago profit, on charges related to its fuel hedging program.

The low cost airline's third-quarter net loss amounted to $120 million, or 16 cents per share, compared with a profit of $162 million, or 22 cents per share, a year earlier.
Excluding one-time items, Southwest earned $69 million, or 9 cents per share, beating the average Wall Street estimate of 7 cents per share, according to Reuters Estimates.
The airline industry has been severely battered this year by soaring fuel costs that peeked at a record high in July before falling rapidly.
Southwest, whose fuel hedges are the envy of the industry, was somewhat insulated from the spike in fuel prices but reported charges of $247 million related to adjustments on a portion of the future period of its hedge portfolio.
The airline's revenue rose about 12 percent to $2.9 billion. The company ended the quarter with $3.4 billion in cash and short term investments.


For The Latest Earnings News, Click Here


Copyright 2008 Reuters. Click for restrictions.

http://www.cnbc.com/id/27212517

 

[Bavarian Chef]

120 dollars? Not too bad.

 

[Kharma Police]

"Ding" you are now free to lose money like the rest of us.

 

[RedDogC130]

You heard it here first 6 pages, over 10,000 views, and 25 posts by General Lee.

 

[ACL65PILOT]

They are human, wow!

 

[momalley81]

Southwest Reports Net Loss Due to Fuel Hedges
Companies:Southwest Airlines Co


By Reuters | 16 Oct 2008 | 07:10 AM ET

Southwest Airlines reported a quarterly net loss on Thursday, reversing a year-ago profit, on charges related to its fuel hedging program.

The low cost airline's third-quarter net loss amounted to $120 million, or 16 cents per share, compared with a profit of $162 million, or 22 cents per share, a year earlier.
Excluding one-time items, Southwest earned $69 million, or 9 cents per share, beating the average Wall Street estimate of 7 cents per share, according to Reuters Estimates.
The airline industry has been severely battered this year by soaring fuel costs that peeked at a record high in July before falling rapidly.
Southwest, whose fuel hedges are the envy of the industry, was somewhat insulated from the spike in fuel prices but reported charges of $247 million related to adjustments on a portion of the future period of its hedge portfolio.
The airline's revenue rose about 12 percent to $2.9 billion. The company ended the quarter with $3.4 billion in cash and short term investments.


For The Latest Earnings News, Click Here


Copyright 2008 Reuters. Click for restrictions.

http://www.cnbc.com/id/27212517

SWA posted a $69 Million Operating profit.

The whole reason there are reporting a loss is due to a change in account rules that Congress voted in, in which SWA has to take a charge on it's fuel hedges since they have become less valuable.

 

[jetflier]

Remember that the "Jerry Springer" crowd will not be flying when air fare's cost more than Greyhound.

 

[RedDogC130]

SWA posted a $69 Million Operating profit.

The whole reason there are reporting a loss is due to a change in account rules that Congress voted in, in which SWA has to take a charge on it's fuel hedges since they have become less valuable.

Plus it shows the pilots during negotiations that the lost money and can't afford to pay us any more $$$

 

[Bavarian Chef]

SWA posted a $69 Million Operating profit.

The whole reason there are reporting a loss is due to a change in account rules that Congress voted in, in which SWA has to take a charge on it's fuel hedges since they have become less valuable.

Not a luv hater, but you're saying some losses are real and some aren't?

So Delta made a profit yesterday, but more importantly, American didn't. If you can't count special one time charges (expenses), I guess you can't count one time gains.

 

[RedDogC130]

Not a luv hater, but you're saying some losses are real and some aren't?

So Delta made a profit yesterday, but more importantly, American didn't. If you can't count special one time charges (expenses), I guess you can't count one time gains.

we are still getting our profitsharing off the $69 million or whatever amount gain.

 

[lowecur]

And it could get worse.

Most of the $2.2B in cash is tied up in fuel hedge contracts. Just think what will happen if oil continues to fall, and more write downs occur, + they are going to have to sell those positions at a loss to gain liquidity.

We'll see how loyal all the takers are if the company rolls over in the next year or so.

imp:​

 

[Falcon Jet 1]

when you guys learn about GAap accounting, then you would understand. SWA made money.

 

[(HCDAW)]

Not a luv hater, but you're saying some losses are real and some aren't?

So Delta made a profit yesterday, but more importantly, American didn't. If you can't count special one time charges (expenses), I guess you can't count one time gains.

It goes like this:

Month 1 : You have $20 mil in fuel hedges (the value has been the same for months, oil has been stable). You bring in $100 mil in revenue and your expenses are $90 mil. Your profit for the month is ($100mil - $90mil) $10 mil.

Month 2 : Oil prices skyrocket (your $20 mil hedges are now worth $40 mil). You bring in $100 mil in revenue and your expenses are $90 mil. Your profit is still $10 mil, but you are now required to report unrealized gains from your hedging positions so you get a second number, a profit of $30 mil ($10 mil + the change in value of hedges of $20 mil). Keep in mind you did not buy or sell any hedges.

Month 3 : Oil prices tank (your $40 mil hedges are now worth $1 mil). You bring in $100 mil, expenses are $90 mil, profit is $10 mil. Once again you have to report another number with one time losses from decline in hedges. ($10 mil - $39 mil = net loss of $29 mil).

As you can see, you are still making the same amount of money month to month, but it looks different because of accounting rules. I know this is simplistic, but that's the general idea behind the two numbers.

 

[Hoke]

Southwest Airlines Reports Third Quarter Financial Results70th Consecutive Quarterly Operating Profit
DALLAS, Oct. 16 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV) today reported its 70th consecutive quarterly operating profit.

 

[Bavarian Chef]

we are still getting our profitsharing off the $69 million or whatever amount gain.

Who cares? That wasn't my point. JB did the same for me last year (or was it the previous).