Southwest Airlines Reports Loss

[lowecur]

Lowecur,
We are still paying the fuel guy market prices. If oil drops to $30 (below hedge) were still better off operationally. GAAP might further skew the true picture, however. Keep in mind that our hedges caused us to show a "loss" but were still well above oil prices. If oil were to drop to 50 for Q1 you might see another "loss". If Q2 it rose to 60 (still below hedge) GAAP would show a gain because its relative to the last quarter, not the original purchase price. The new reporting rules in GAAP really dont make sense if you ask me.

If your house gains or loses 50k in a quarter you dont factor that into your personal net income do you? That is essentially what is going on here.

My figuring was dependent on Gary holding on to his positions. Since it sounds like they are unwinding them ahead of the curve, then the exposure to write offs will go with it. He just needs to be far enough ahead of the curve not to take any big losses. We'll just have to see how that all plays out in the coming 12 months.

It will be interesting if some of the other carriers try and set the market in some of your key cities, as their biz model and expenses may give them an advantage with oil below $80. That could limit WN from increasing the revenue it will need to stay firmly in the black.

That being said, has anyone noticed the divergence in stock price between AAI and JBLU? I think JBLU faces some interesting decisions to refinance debt as it comes due in 2009 and beyond. DL may get their wish to buy them.

imp: ​

 

[Whine Lover]

"An up and coming airline can't have industry leading wages."

Maybe not...but they can have Industry Standard wages.

Funny, but start-ups manage to pay Industry Standard rates for airframes, insurance, parts, spares, gates, infrastructure, taxes, fees etc.

Yes, they negotiate breaks here and there and receive some incentives now and again...But Pilots are the ONLY ones who will fall for the ridiculous argument that 50% or less is what is necessary to accept as a wage to "help" the airline get started or, in the case of harsh economic times, to survive.

YKMKR

 

[vixin]

Whine,

I agree the blame goes to the pilots that will work for sunstandard wages, not the company offering them.

 

[Lowpayisgreat]

Not ROTC or ZOO, Started out working on jets as an enlisted guy. Add to that I went to school in Missouri so thats why I suck at writing. Also, my brain works faster then my fingers. I got furloughed in 2002 and did a civilian job for 3 years and did very well and moved up quick. Pilots always undersell themselves. We are mostly type A, take charge guys, who want to get the job done. The non-flying world loves that, and believe me, there's not alot of people like that out there. Its not hard, you just have to apply yourself like you did when we were all learning to fly. Sorry for the spelling corrections, but very limited time to be on here with two jobs (UPS and Guard) and two kids. Take care

 

[jmreii]

Remember that the "Jerry Springer" crowd will not be flying when air fare's cost more than Greyhound.

Nobody else will be flying either since they are too busy trying to hold on to the rest of their life along with the tiddy bowl man and the crap that in the toilet.

 

[Whataburger]

Whine,

I agree the blame goes to the pilots that will work for sunstandard wages, not the company offering them.

What and Who decides standard is the million dollar question.
Who decides standard for teacher, doctors, lawyers, plumbers, fire fighters, engineers, etc. Isn't it basically economically driven? UPS and FedEx drivers can make tons of cash for not flying much because those companies SEEM damn near recission proof.

 

[328dude]

I sure as heck thought this was an anonymous web board. If you want to throw your name out there, go ahead, nobody is stopping you. As far as what I will do, I will enjoy this board and not get so frustrated, like you do. Have a great day with those 25 minute turns. I won't be doing that. And, I look FANTASTIC in the mirror. Going to Rio a lot gives me a great tan.

Bye Bye--General Lee

Whats more interesting is the fact you have played this game for so long, that it has grown so far out of proportion for you to acknowlegde your real position at Delta. It's not my job to call you out or point out your real position within Delta, but some of us know the real truth and what you do, and as you like to protray, flying is not one of them.

Have fun with your fantasy world. Looking forward to the snappy comment.

 

[Lowpayisgreat]

Well don't be so fast. Lets just see what happens in the first qt from both Fed Ex and UPS. I'm a UPS guys and I bet they will try to furlough around 100 guys and several hundred from Fred Ex. No- one is recession proof if it get as bad as some say it will. Hopefully I'm wrong, but we are not bullet proof just alittle more so then the pax side

 

[maxblast72]

Well, you forgot the not-so-small fact that we pretty much set the fares where we fly. I don't recall any fare increase that WE initiated that didn't stick, do you?

Are you sure that Southwest has as much pricing power as you say? Monthly year over year load factor comparisons are down 5-6% at Southwest. Those numbers seem to indicate that Southwest has raised prices alot already or the economy is really starting to slow, neither of which lead to alot of pricing power.

Did Gary Kelly set ticket prices low intentionally to reduce Southwest's 3rd quarter's operating profit when compared to 2007?

 

[The Victors]

Southwest's average fare was up to $125 (about 18%) for the quarter but their load factor dropped over 5% while most other airlines load factors were down less than 2%. RASM was up about 10% overall.

Southwest is probably reaching that price point were they are going to reduce demand. Should be interesting going forward. With 75% of 2009 fuel hedged at $73/barrel, should be a pretty even playing field across the industry if fuel remain between $60-$80/barrel.

How exactly is it a "level playing field" again when swa must compete with companies like airtran who's pilots accept work at half price?