Boyd's take on the F9/WN/UA showdown

[SWA/FO]

Flaws in your profit? How can you have a flaw in your profit? Does that mean that UAL, NWA & AA are all flawless, since they don't make profits?

 

[whymeworry?]

Flaws in your profit? How can you have a flaw in your profit? Does that mean that UAL, NWA & AA are all flawless, since they don't make profits?

I was referring to Boyd's statement that the great SWA, without fuel hedges, is actually losing money, hence their business model is not as bullet-proof as all Wall Street analysts have suggested. This was from an earlier Boyd report.

Of course, regardless of Boyd's statement, SWA is making a profit because they did hedge fuel. But Boyd was suggesting that when fuel hedges end, the LCC model will have to change if they intend to remain the darlings of Wall Street. Gee, where do you think management is going to go for those changes?

UAL/NWA/AA all had flawed business models but that was quite largely due to their ignorance about fuel hedging. Ironically, up until fuel price spikes at the beginning of this decade, every airline in the world regularly engaged in hedging practices. But they did so on the advice of Wall Street analysts. When those same analysts were predicting fuel prices to retreat at $30, $40, and $50 price points, it was all the airlines could do but listen to that advice and wait for prices to drop before they resumed fuel hedeging programs. Well, as all of us now know, Wall Street got it wrong and so did the purchasing departments at all the majors.... worldwide! In the meantime, Exxon and Shell made more in the third quarter profit of this year than the airlines have collectively lost in the past 5 years. SW got it right and that has given them the catalyst to maintain momentum with their growth model. If fuel prices drop, and I pray they do, SW has nothing to worry about. But if fuel prices remain high as SW hedges mature, they will have to address their profit model, which means cost-cutting or capacity cuts. By contrast, the Legacy carrier have spent the better part of 4 years overhauling their balance sheets and proactively changing their business models (to the extent that it's possible to do so). This translates into "leaner-n-meaner" carriers that can more apltly compete both here in the US and abroad... even with crude at $60 per barrel.

Don't shoot the messenger. I my earlier comments were just referring to Boyd's report.

 

[Slug]

Profit without hedge

Actually, we made a profit the last two quarters without the hedging. I don't know the exact numbers, but if you take out some of the tax liability and whatnot, the bottom line is we were profitable. Gary Kelly even said so.

At first look, I know it doesn't appear that way, because hedging profit was greater than total profit. However, there are some costs/taxes from hedging that isn't reported as such.

Boyd is ill informed and opinionated against us. I don't really care about that, but it hurts us with the public when a so-called expert puts out a negative spin. This paragraph alone (talking of seat assignments, or lack thereof) shows that Boyd is biassed and uninformed about us.
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But it's woefully outclassed in long-haul and transcon markets. That family of four that didn't have a computer to check in early at WN, might find that little Johnny may have to sit in 34E, six rows from mamma, between two Mohammed Atta look-alikes on their way to a jihad convention in 'Vegas.


Oh well, every talking head is always right, right? We'll do okay, don't worry, be happy.


Slug
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[Skyrunner]

Slug,

Were you in Viking 9? Profile looks a little suspicious.

CYa

SR

 

[ivauir]

You SWA guys are classic. Someone draws attention to flaws in your profit model and you immediately attack his credibility. Kind of like the ATA CEO whining about the Budweiser commercial (discount airline guy). Sure that song was a bit harsh but it was a joke and his crying just furthers the cause of political correctness in this country... which I think we can all agree has gone too far. LCCs have had no problem taking pot-shots at the antics of Legacy carriers over the years. Someone takes a shot at them and everyone starts crying. If you're gonna dish it, ya' gotta' take it to.

Um, WTF? Why are bringing up a BEER ad? Overall Boyd has been off base WRT SWA. I guess we'll see, but I betcha the folks in Dallas are pretty sure DEN will work out OK for us this time. If not they'll have a lot of egg on their face ...

 

[Slug]

Viking IX

Yep, I'm a niner, or a IXer. '88 - best to date, pep rally!


Slug


Give me a hint, were you a IXer, too?

 

[buttercup]

Boyd is overrated. He made his reputation off of the whole RJ craze, since then his legions of followers have been hugging his nuts as if he's the Alpha and the Omega!!

 

[whymeworry?]

Actually, we made a profit the last two quarters without the hedging. I don't know the exact numbers, but if you take out some of the tax liability and whatnot, the bottom line is we were profitable. Gary Kelly even said so.

At first look, I know it doesn't appear that way, because hedging profit was greater than total profit. However, there are some costs/taxes from hedging that isn't reported as such.

Boyd is ill informed and opinionated against us. I don't really care about that, but it hurts us with the public when a so-called expert puts out a negative spin. This paragraph alone (talking of seat assignments, or lack thereof) shows that Boyd is biassed and uninformed about us.
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But it's woefully outclassed in long-haul and transcon markets. That family of four that didn't have a computer to check in early at WN, might find that little Johnny may have to sit in 34E, six rows from mamma, between two Mohammed Atta look-alikes on their way to a jihad convention in 'Vegas.


Oh well, every talking head is always right, right? We'll do okay, don't worry, be happy.


Slug
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Ummmm... Dude, did you even read the Boyd article? He praises SW mgmt for knowing it's business well and for recognizing all the threats they face. Furthermore, he praises SW mgmt for paying their employees well and for being a formidable player. All he is saying is that the economics of competition for the LCC are changing and it's not going to be an easy process to make it in DEN. If anything, he ripped UAL apart for that operation called TED. I don't see how he was all that negative about SW so how can you say he hates you guys. Rather, he was exposing the fundamentals of y'alls business models with respect to future market expectations.

 

[whymeworry?]

Boyd is overrated. He made his reputation off of the whole RJ craze, since then his legions of followers have been hugging his nuts as if he's the Alpha and the Omega!!

Yeah, your the expert, right? Uh-huh and so I guess Wall Street knows their sh!t and Boyd is over-rated, right? Have you ever taken the time to read any Boyd reports? Then track their usefulness? He doesn't just predict RJ prowess, or lack thereof as is the case of late, he address every segment of aviation.

You've got a lot to learn. Keep burying your head in the sand though. See how well ignorance worked for ALPA pilots of major carriers.

 

[T45Flyer]

Look at the numbers.

Last three quarters: CASM (excluding fuel) has dropped every quarter. Yes folks, this does include those pay raises!

Last 4 years: SWA has gained around 90 aircraft and has REDUCED employee headcount from 36,000 to 31,000. Productive.

Summary: Just because SWA has industry high employee pay RATES, does not mean that we have industry high employee COSTS. SWA is tirelessly working on every aspect of costs 365 days a year.