Scope out RJ's
Well-known member
- Joined
- May 31, 2006
- Posts
- 1,926
Oh how short your memory is old wise one.....
Million dollar losses, code sharing, contract negotiations stalling, stock price down 50%. Looks like you should watch where you throw those stones in that glass house sport!
Southwest Airlines reports first quarterly loss in 17 years
Southwest Airlines posted its first quarterly loss in more than 17 years Thursday, after being hit by an accounting charge to reduce the value of its fuel hedging contracts.
The Dallas-based airline said it lost $120 million during the quarter, after having to record a $247 million charge to reflect the drop in value of its hedging contracts, which allow it to purchase jet fuel in advance at predetermined prices.
Under accounting rules, the airline is required to reduce the value of the contracts on the books if fuel prices are falling.
Not including the one-time charge, the airline reported a profit of $69 million for the third quarter, compared with a profit of $162 million in the same period a year ago.
Gary Kelly, the airline's chief executive, said the fuel contracts are still an overall benefit to the airline. He said they saved the carrier has saved $1.3 billion on fuel prices during the first three quarters of this year.
He also said that a decline in jet fuel prices is a positive development for the airline despite the accounting charges.
"I can assure you that falling energy prices is a great thing for Southwest Airlines," he said in a conference call with reporters Thursday morning. He noted that the airline still purchases some of its fuel at market prices.
Kelly said that revenues were strong during the quarter, up nearly 12 percent compared with the third quarter of 2007. But he said the airline is worried about how the slowing economy will impact demand for travel.
"We're very concerned about the economy, especially after the first of the year," he said. Bookings for the rest of the year "look fine," he said, "but certainly for next year, I'm not willing to make any predictions."
The airline stands to benefit, Kelly said, from moves by competitors to cut capacity. Other airlines are cutting the number of available seats by 15 percent in markets where they compete with Southwest.
"That's a very significant shock absorber for declining demand in this recession," he said.
He also pointed to Southwest's lack of fees on items like checked bags or reserved seats. The airline has been advertising heavily in recent months as the "no-fee" carrier.
"I'm very confident we are winning new customers," he said. Employees tell him of many cases "where customers say they are coming to us specifically because we aren't charging the baggage fees."
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