New Jets for SW -- Fuel Hedge is great!

[MK82Man]

11:23 AM CDT Friday, 5/21/2004
Wichita Business Journal

Southwest to add 58 more Boeing 737s in 2005

Southwest Airlines will add 58 more Wichita-built Boeing 737s to its fleet in 2005, company officials said at the carrier's annual shareholder and employee meeting in Dallas.

The nation's top low-fare carrier, which also is the world's largest operator of the 737, is profitable and has the opportunity for growth, executives said. Boeing Wichita plays a major role in the 737 as 75 percent of the airframe is built here along with other parts.

Southwest has been fortunate in today's fuel situation as it is insulated from much of the price increases by options it holds to buy about 80 percent of its fuel at nearly 60 percent of the current price through 2005.

CEO Jim Parker said, however, that the spiraling fuel prices could cause the carrier to increase fares $1 to $2 each way on some flights to compensate.

© 2004 American City Business Journals Inc.

 

[chase]

Mark82

I was just debating this article with a friend & began my own research on it, here is what I found:

1. I listened to the webcast from the meeting & Parker never mentioned 58 aircraft. Now there was a meeting with reporters afterwards away from the microphones so who really knows what was said.

2. The total number of net aircraft for this year, 29, the total number of net aircraft next year, 29....total 58...coincidence? Maybe.

3. Two other reports, one confirms the story, a news broadcast the morning of 20 May on a local Ft Worth story where the 58 number is used again & a conflicting written article in the Ft Worth paper specifically referring to the aircraft orders this year of 29 & next year of 29.

The Wichita paper may have their facts straight or someone transcribed their notes wrong. I would expect this story to either be clarified tomorrow or confirmed....Boeing stock alone would probably show a bump with that along with ours, we'll see.

Not trying to throw cold water on the parade but simply keeping expectations in line with reality. What was said at the shareholder's meeting was this:
1 week after PHL opened, every flight that originated out of PHL was completely sold out...the numbers have been the best of any new city in the history of SWA

A class act by a USAir capt was relayed to some of us....he came over to the area & wished the SWA employees good luck & welcome to PHL....pls keep the snide comments down but I thought the gesture was great & if I get to PHL will return the gesture to our fellow airline employees there if the opportunity presents itself.

Taking into account various stage lengths SWA still has the lowest seat cost per mile according to SWA officials. $40M savings on travel agent commissions, $18M saved next year with the closing of the res ctr, $$Ms saved in fuel costs due to winglets along with noise levels, lower mx costs & with hedging it will be many more $$S in our profit sharing....350 aircraft to be purchased between now & 2012, some are for replacement obviously but many for growth....$1.8B cash available for growth or contingency...debt is around 38% vs industry avg above 90%....I hope we find more than 29 airplanes for next year & dont' be surprised if something else comes down but read this latest story with a jaundiced eye until confirmed with other sources is my recommendation.

 

[kelbill]

I never heard the 58 number either, BUT, Parker did say in previous articles that SWA would plan to grow by 11% in 2005 from what I recall. 11% of 400 aircraft would be 44 new planes (doesn't quite take into account lower seat totals of the 200/500), coupled with the final 200 retirements and we would have to grow the fleet by at least that number to achieve the 11% growth. I am assuming we don't grow simply by flying the birds we have more of course. I could be wrong. Plus, hiring 500+ per year (now everyone is telling me that is straight from training), coupled with pilot retirements makes the 58 number seem much more reasonable than 28. Either way, me and you want to upgrade as quick as possible Chase.