Open Letter to All Airline Customers and SWA

[CDub]

Just received this in my email inbox. What I found interesting about it was the fact that SWA was one of the 12 signatories on this open letter. Isn't this sort of thing (i.e. fuel hedging) exactly what is giving SWA one of their biggest advantages in today's market? I understand that everyone will have a hard time if the current trend with fuel continues, but I would imagine that SWA doesn't want this particular problem to disappear too quickly.

Hello Mr. XXXXXX,
[FONT=Tahoma, Verdana, MS Sans Serif]Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now. [/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. [/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation. [/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs. [/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper. [/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]The nation needs to pull together to reform the oil markets and solve this growing problem. [/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com. [/FONT]

[FONT=Tahoma, Verdana, MS Sans Serif]Richard Anderson
CEO
Delta Air Lines, Inc.[/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Gerard J. Arpey
Chairman, President and CEO
American Airlines, Inc.[/FONT]

[FONT=Tahoma, Verdana, MS Sans Serif]Bill Ayer
Chairman, President and CEO
Alaska Airlines, Inc.[/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Dave Barger
CEO
JetBlue Airways Corporation[/FONT]

[FONT=Tahoma, Verdana, MS Sans Serif]Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc.[/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Robert Fornaro
Chairman, President and CEO
AirTran Airways[/FONT]

[FONT=Tahoma, Verdana, MS Sans Serif]Timothy E. Hoeksema
Chairman, President and CEO
Midwest Airlines[/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.[/FONT]

[FONT=Tahoma, Verdana, MS Sans Serif]Gary Kelly
Chairman and CEO
Southwest Airlines Co.[/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Douglas Parker
Chairman and CEO
US Airways Group, Inc.[/FONT]

[FONT=Tahoma, Verdana, MS Sans Serif]Douglas M. Steenland
President and CEO
Northwest Airlines, Inc.[/FONT]
[FONT=Tahoma, Verdana, MS Sans Serif]Glenn F. Tilton
Chairman, President and CEO
United Airlines, Inc.[/FONT]

 

[Superpilot92]

airlines and companies who actually use the oil are the ones that are supposed to be trading oil. Speculation by outside sources are partially to blame for the spike in oil. The market was heading down so "speculators" started dumping money into commodities. These speculators are piggybacking off of one another rising the price of oil. The margins on oil are way to low. Raise them and you get the small time traders out of the oil market which would help free it up.

Supply and demand and the value in the dollar also play into the rise in cost but increased speculation has raised it by 30-40 dollars a barrel. Speculation is 70% of all trades now in the oil market, thats up from 30% in recent past. Stopping over speculation will help.

We also need to raise the value of the dollar and find alternative energy, drill more, and ween ourselves off of foreign oil before we REALLY find ourselves with a shortage of oil. the cost of energy is killing our economy right now and anything and everything we can do to get the price down and allow this country to recover needs to be done. This should be an eye opener for the country that this is a HUGE problem.

We need a "man on the moon" project in this country and set a time frame to discovering a viable alternative fuel.

(stepping down off of pedestal now)

 

[SWA GUY]

www.AmericanSolutions.com

Sign the petition.

 

[AA767AV8TOR]

Very interesting since SWA has all but destroyed the rest of the airline industry since 911 with their fuel hedging program.

It’s been the key to their success. I wonder what their motive is??

AA767AV8TOR

 

[SWA GUY]

Nice reply. Quit typing on your daddy's keyboard and get back to your kindergarten class.

 

[Ameriagle]

airlines and companies who actually use the oil are the ones that are supposed to be trading oil. Speculation by outside sources are partially to blame for the spike in oil. The market was heading down so "speculators" started dumping money into commodities. These speculators are piggybacking off of one another rising the price of oil. The margins on oil are way to low. Raise them and you get the small time traders out of the oil market which would help free it up.

Supply and demand and the value in the dollar also play into the rise in cost but increased speculation has raised it by 30-40 dollars a barrel. Speculation is 70% of all trades now in the oil market, thats up from 30% in recent past. Stopping over speculation will help.

We also need to raise the value of the dollar and find alternative energy, drill more, and ween ourselves off of foreign oil before we REALLY find ourselves with a shortage of oil. the cost of energy is killing our economy right now and anything and everything we can do to get the price down and allow this country to recover needs to be done. This should be an eye opener for the country that this is a HUGE problem.

We need a "man on the moon" project in this country and set a time frame to discovering a viable alternative fuel.

(stepping down off of pedestal now)

Come on....are you T. Boone Pickins?

 

[Max Powers]

Very interesting since SWA has all but destroyed the rest of the airline industry since 911 with their fuel hedging program.

It’s been the key to their success. I wonder what their motive is??

AA767AV8TOR

Their motive you ask? Well those fuel hedges will not last forever they are planning for their future. Duh

 

[(HCDAW)]

People are missing the point, speculators are an indispensable part of the market. They complete the symbiotic relationship between those who want to minimize risk (Hedgers) and those willing to take it (Speculators). Speculators are taking quite a gamble on the futures market, but for every winner, there is a loser. If you really want to screw up the market let the government get involved.

Southwest began hedging fuel for the same reason that a textile manufacturer buys cotton hedges, to protect themselves against future price volatility in the commodity on which they depend. It's a planning and safety tool. Without speculators willing to assume risk, you can't have hedgers trying to minimize their risk.

The speculators aren't causing the price of oil to go up. The uncertainty in the regions that supply oil, the weak US dollar, and basic supply and demand are causing the price of oil to go up.

 

[bugchaser]

Very interesting since SWA has all but destroyed the rest of the airline industry since 911 with their fuel hedging program.

Wow, by using good established business practices, we are ruining the industry? Maybe the rest of the industry is ruining itself by their inability to operate their businesses. Once again, hedging is not some voodoo magic or shady tactic. Almost all users of commodities use hedging to know their future costs. It seems to me that you are acting like a crybaby because your management were foolish and did not properly run your airline. What SW accomplished with their risk management program should be the standard. Stop blaming SW and start blaming the fools that run your place.

 

[Whine Lover]

"Very interesting since SWA has all but destroyed the rest of the airline industry since...( should read ) Deregulation."

" Wow, by using good established business practices, we are ruining the industry? Maybe the rest of the industry is ruining itself by their inability to operate their businesses."

Correct....a free market can be a real bitch if you don't know what you are doing, especially if you have a very capable competitor who has been successful in driving wages, prices and costs to all time lows.

YKMKR