SWA going to MKE

[BLUE BAYOU]

I'm going to put my money on AAI... They're already established there and offer great value for their fares, XM radio and soon WIFI. Southwest has neither of those nor a business class like AAI does... And btw, I think AAI made some money last quarter-- SWA lost a bit...

 

[Daddy]

I'm putting my money on airline management...either way, the pilots will get screwed. JBLU pilots are not smart enough to organize even with their pitiful pay rates, SWA pilots are voting in a TA lagging every other employee group, AAI pilots are in disarray...yep, my money is on management to get paid no matter how poorly they do at ANY airport. The rest is just noise.

 

[StopNTSing]

I'm going to put my money on AAI... They're already established there and offer great value for their fares, XM radio and soon WIFI. Southwest has neither of those nor a business class like AAI does... And btw, I think AAI made some money last quarter-- SWA lost a bit...

Honestly, if I hear this asinine argument one more time from yet another FI know-it-all, I think I'll hurl! Southwest became the largest domestic carrier in the USA in spite of no first-class, no meals, and no IFE. So can we please dispense with that utterly useless comparison! Apparently most travelers are more concerned with a reasonable ticket price, an expectation that they will actually get to their destination on time, and customer service that is not on par with the DMV.

 

[Colonel Savage]

Honestly, if I hear this asinine argument one more time from yet another FI know-it-all, I think I'll hurl!! Southwest became the largest domestic carrier in the USA in spite of no first-class, no meals, and no IFE. So can we please dispense with that utterly useless comparison!! Apparently most travelers are more concerned with a reasonable ticket price, an expectation that they will actually get to their destination on time, and customer service that is not on par with the DMV!!

Hmmm. Touch a nerve did we?

And don't forget that nearly BILLION DOLLARS in fuel hedges you guys have to repay over the next four years.

 

[firstthird]

And don't forget that nearly BILLION DOLLARS in fuel hedges you guys have to repay over the next four years.

don't worry, we won't. and maybe our union will even bring it up at some point. I had a BOD member on the J/S and mentioned it to him, he didn't know what I was talking about. a little scary. not that it matters that much, it is what it is. the 3 company fuel hedgers have put the other 32,000 employees into a deep stall, the rest of us get to fly it out over the next 3 years. We pissed away our advantage when we were making beaucoup bucks from fuel hedges by underpricing our product. no major players went under. everyone else got their costs down, and now here we are 4 years later, with an added 250 million a year in bad hedges to pay off. karma is a biatch.

 

[StopNTSing]

Hmmm. Touch a nerve did we?

And don't forget that nearly BILLION DOLLARS in fuel hedges you guys have to repay over the next four years.

Why did you add all those exclamation points, bold face, and larger font size when you quoted my original post? Nice editorializing there, Colonel....you've got a real future in print journalism if this aviation thing doesn't pan out for you.

My response was not directed at the Tranny specifically. If you review the FI archives you will see my point that the same tired argument has been brought up ad nauseam with SWA vs. Frontier, jetblue, Virgin, etc, etc, etc.

P.S. Thanks for your concern over our hedges, but don't get too smug about them yet. Last I looked jet-A was $60/bbl and rising...

 

[firstthird]

Last I looked jet-A was $60/bbl and rising...

which is going to cost us as well, since we got rid of most of our hedges and no longer have the cash to hedge much in the future. the billion in payoffs is independent of where oil goes. if it goes to 10 bucks or 140 bucks, we still owe a billion dollars over the next 4 or so years.

 

[StopNTSing]

which is going to cost us as well, since we got rid of most of our hedges and no longer have the cash to hedge much in the future. the billion in payoffs is independent of where oil goes. if it goes to 10 bucks or 140 bucks, we still owe a billion dollars over the next 4 or so years.

I stand corrected....we're screwed. Wasn't this thread about MKE?

 

[Splert]

which is going to cost us as well, since we got rid of most of our hedges and no longer have the cash to hedge much in the future. the billion in payoffs is independent of where oil goes. if it goes to 10 bucks or 140 bucks, we still owe a billion dollars over the next 4 or so years.

I thought LUV hedges were still in place though 2012 or 16. LUV just unwound 2009 and 2010.

 

[Colonel Savage]

Why did you add all those exclamation points, bold face, and larger font size when you quoted my original post? Nice editorializing there, Colonel....

Well I just added a few, one each to the first two you used, and then the last line was the only one that didn't have one, so..... And the font size and bold face seemed to match your level of pique over the matter, so I did indulge a little. No offence intended, and it is FI you know. haha (Tranny's hedged at $60/bbl, btw)

Hey, you guys may get your hair mussed a little the next few years, but you've had a really good ride for a while now. That's all anyone is good for in this business.

 

[firstthird]

I thought LUV hedges were still in place though 2012 or 16. LUV just unwound 2009 and 2010.

You are probably right, but I think the hedges we have for later on are not nearly as good or cover as high a percentage. We definitely owe the 950 million, regardless of future prices. I have seen that we are getting back in with some hedging but nothing to knock your socks off. which is fine by me.

we were good when we were 65% hedged at 65 a barrel for 2009. then we went to 75% hedged at 75 a barrel and that was the bet which screwed the pooch. we bought some hedges around 140 a barrel. we went from locking in future costs to gambling. and we lost. hopefully our hedge geniuses learned something and our future hedging is like our hedging up until the summer of 2008 when we got too smart for ourselves.

locking in at a price we KNOW we can make money is much different than betting the future of the company on the commodities market, which is what they did last summer.

 

[fam62c]

One of these days we'll see a headline that says "Southwest Airlines Enters Every Market." They seem to be a lot less certain than they used to be. They don't seem to develop a market as carefully as they used to before they are off to the next thing. The flying that they are adding is coming from other places; it seems like they are searching for enough revenue to exceed costs and it's not as easy as it used to be. I'm not a SWA basher, it's a great company and they've done more things right in this industry than anyone else, but they are no longer the rapidly expanding carrier that they once were with new planes and new employees coming onto the property in droves to dilute their costs. SWA is too big to ever have the growth that they once had on a percentage basis. They still have an advantage but that advantage will decline as they are now paying the same for fuel as everybody else and they are paying more for labor than most airlines. They also have a higher percentage of more senior (read more expensive) employees than AAI and JetBlue because they have been around for a long time. I also wonder how well SWA team spirit and employee morale will hold up without the rapid advancement and big profit sharing checks of days gone by. SWA doesn't seem to be immune from economic downturns anymore.

SWA will have a tougher time as a large, mature carrier that's not growing than they did as a smaller, rapid growth company. It's the nature of the business, the larger you get, the more you pay and the longer you have been around the harder it gets to control costs. The biggest advantage that SWA may have against AAI in MKE will be their ability, made possible by their stronger balance sheet, to absorb losses in a market longer than AAI until AAI throws in the towel. SWA might start behaving more like a legacy carrier and start caring more about market share than profitability. SWA is the heavyweight in the ring and can take more punches than anyone else and still remain standing.

 

[Colonel Savage]

"They seem to be a lot less certain than they used to be. They don't seem to develop a market as carefully as they used to before they are off to the next thing. The flying that they are adding is coming from other places; it seems like they are searching for enough revenue to exceed costs and it's not as easy as it used to be. I'm not a SWA basher, it's a great company and they've done more things right in this industry than anyone else, but they are no longer the rapidly expanding carrier that they once were with new planes and new employees coming onto the property in droves to dilute their costs..."

You make several good points. One thing SWA has been doing for several years is getting away from the original business model of operating only out of smaller, low traffic airports efficiently (HOB, MDW, etc) to flying into more and more high volume, delay prone airports (PHL, BOS, soon LGA). They may increase traffic and revenues, but it decreases their efficiency and increases CASM. The core business based on the original model still dominates their system; so long as that remains the case they will succeed.

Interresting article below about companies that do get away from their winning strategies and what the consequences can be:

http://www.businessweek.com/magazin...6786379.htm?chan=magazine+channel_cover+story

 

[jonjuan]

When will WN announce HPN?

 

[FlyinGuy]

I did not know that we flew into Hobbs, NM!!!????