lowecur
Well-known member
- Joined
- Sep 14, 2003
- Posts
- 2,317
This little comparison on the future of the legacy's vs the LCC's is controversial but interesting. Boyd clearly doesn't like the business model of WN(too limited). Gary Kelly and Herb have based their future on the failure of the legacy model. Mike Boyd thinks they are in for a big surprise, just as they were when US Airways didn't go belly up. He really loves NWA. He truly believes the global airline business model will overwhelm the LCC's eventually. I'm a little confused by his large revenue projections for Shreveport, Savannah, and other small towns.
I think he is wrong about SWA where he states they would have lost big money without fuel hedges last Q. I think Tazman pointed out that when you pulled the fuel hedges and added back in the smaller amount they would have to pay on profit sharing and taxes, SWA still made money. That said, on an annual basis I think he is probably right:
[font=Tahoma, Verdana, Lucida]Fact: This is a sure sign that whoever makes the statement doesn't know any more about the fundamentals of today's airline industry beyond what they just read someplace else.[/font]
I think he is wrong about SWA where he states they would have lost big money without fuel hedges last Q. I think Tazman pointed out that when you pulled the fuel hedges and added back in the smaller amount they would have to pay on profit sharing and taxes, SWA still made money. That said, on an annual basis I think he is probably right:
[font=Tahoma, Verdana, Lucida]Fact: This is a sure sign that whoever makes the statement doesn't know any more about the fundamentals of today's airline industry beyond what they just read someplace else.[/font]
- [font=Tahoma, Verdana, Lucida]Note: Last quarter, American and Continental reported profits, and they were essentially paying "retail" for their jet fuel.[/font]
- [font=Tahoma, Verdana, Lucida]Note: Last quarter, if Southwest had been paying retail for their fuel, they'd have reported a big loss. True, they have hedged fuel, but that was a bet they made long ago - a bet that, fortunately, they won big-time. But it does not change the fact that on an apples-to-apples basis, AA's cost restructuring over the past three years gave it an all-up quarterly profit, and on an all-up basis, Southwest's system isn't making money. [/font]
[font=Tahoma, Verdana, Lucida]It's great that whoever lost the hedge bet is bearing much of the cost of WN's fuel, but without that, the basic model Southwest operates today isn't a money-making one with high fuel prices.[/font]
http://www.aviationplanning.com/asrc20.htm