61 of 73 new markets lose money for SWA

[lowecur]

Lowecur,

The Shinola goes on the top...

OK!

Here's a more comprehensive article. Gary is doing his best impersonation of Alfred E. Newman (what me worry?).


http://www.washingtonpost.com/wp-dyn/content/article/2007/05/25/AR2007052502107_pf.html

 

[Bavarian Chef]

All my friends are leaving jb for swa, or want to leave jb for swa -- that must mean the end of swa is near.

 

[mdf]

Don't you guy's ever get tired?

Here's what it said:

"The airline continues to add aircraft at a rate of over 35 each year, even though 61 of the 73 markets added since early 2003 are consistent money-losers, the brokerage said"

Newsflash: Nothing has happened in this industry since 2000, let alone 2003. What's that number like over the same period at other airlines? Especially the ones that have had government training wheels in the form of bankruptcy protection. I think you SWA haters are need something better than this, and LBB to latch onto.

 

[AlbieF15]

Lowcur may be lost at times, but there is a sobering fact right now in the industry....

The low-hanging fruit has been grabbed. There are not many over priced city pairs waiting to be gobbled up by Airtran, SWA, and JB. Much of the growth in the east by these carriers was positioning for the day US Air died. It didn't happen. Now--there is still a lot of capacity around the east coast and yields aren't huge.

Will SWA wither away. Probably not. Will it assimilate and grow like it did in the 90s and early 00s when 9/11 put the other airlines in tailspin? I don't know. They've proven they can make money for years and years and years. I'm not pulling the plug on them yet.

But the guys hired there this year that think a 5-6 year captain's upgrade is coming may be disappointed. There's been a LOT of hiring the last 3 years, and the combination of age 60 and even modestly slowly growth could put a crimp in airline growth and advacement.

 

[YourPilotFriend]

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.

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.

 

[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.