Ok, I checked into it and you're still retarded.
Insults aside, I did a Google on SWA fuel hedging (as you could have done as well)
I found a good academic paper here, with the following quote:
Jet fuel futures contracts do not exist in the United States, so futures on crude or heating oil must be used instead to hedge jet fuel purchases. Because these futures contracts are based on an underlying commodity other than jet fuel, they introduce basis risk because they are not perfectly correlated. Basis is generally defined as: Basis = spot price of hedged item – futures price of selected contract
So, back to what I was saying, the cost of the futures contract is based on today's spot price. From reading the paper, SWA uses over-the-counter contracts (traded by investment banks) on fuel oil, which has a 93% correlation with jet fuel, since jet fuel contracts don't exist to purchase.
Here's the interesting part: SWA uses a "mean reversion" strategy, where they bet on the cyclic part of oil prices, "what goes up, must come down".
Here's another interesting quote:
Secondly, hedging allows airlines to take advantage of investment opportunities in times of high commodity prices. Carter et. al. demonstrate that airline investment opportunities are positively correlated with periods of high jet fuel prices. This is explained by the significant distress costs in the industry. It is more likely that airlines will go bankrupt when fuel prices are very high, and in such cases they are often forced to sell planes and other assets at substantially below-market prices.
Another quote:
As of December 2003, Southwest had a mixture of purchased call options, and fixed price swap agreements in place to hedge portions of its expected 2004-2007 jetfuel consumption.
So back to my argument that your rumor is retarded, saying "I hear the company that does SWA'S futures is headed for bankruptcy", is about the same as saying "I understand the entire financial system of the US is headed for bankruptcy".