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.
SWA has been getting 30+ airplanes a year since at least 2000. They even had a year with high costs due to -200 retirements.
So they have spent 1.4B a year during those times, minimum, for new airplanes. Where is the high debt to show for it? The debt to equity is still way low. It went up for about a year and is now back down.
Answer--They are racking up assets as they increase debt. A low debt to equity operation. Works great in a rising interest rate environment and reduces the need to lease airplanes and equipment. Which, over the long term, is expensive.
So you're saying they need another $700mil to replace the hedges. o.k. But so does everyone else.
I'm not seeing the doom and gloom you are. New routes are expensive to start and establish. Once they are humming along for a couple of years folks get used to them and loyalty (aware of the schedule, reliability factor) sets in.
The worst I see is loss of low hanging fruit and frustration of future growth. Prediction of doom, gloom and big losses, IMHO, is premature. If the future is losses, there is quite a bit of room to get expenses back down if necessary.
Remember, Wall street trades on trends. Not on the ability of a company to deal with those trends long term.
