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Southwest Airlines Reports Loss

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And it could get worse.

Most of the $2.2B in cash is tied up in fuel hedge contracts. Just think what will happen if oil continues to fall, and more write downs occur, + they are going to have to sell those positions at a loss to gain liquidity.

We'll see how loyal all the takers are if the company rolls over in the next year or so.

:pimp:​
 
Not a luv hater, but you're saying some losses are real and some aren't?

So Delta made a profit yesterday, but more importantly, American didn't. If you can't count special one time charges (expenses), I guess you can't count one time gains.

It goes like this:

Month 1 : You have $20 mil in fuel hedges (the value has been the same for months, oil has been stable). You bring in $100 mil in revenue and your expenses are $90 mil. Your profit for the month is ($100mil - $90mil) $10 mil.

Month 2 : Oil prices skyrocket (your $20 mil hedges are now worth $40 mil). You bring in $100 mil in revenue and your expenses are $90 mil. Your profit is still $10 mil, but you are now required to report unrealized gains from your hedging positions so you get a second number, a profit of $30 mil ($10 mil + the change in value of hedges of $20 mil). Keep in mind you did not buy or sell any hedges.

Month 3 : Oil prices tank (your $40 mil hedges are now worth $1 mil). You bring in $100 mil, expenses are $90 mil, profit is $10 mil. Once again you have to report another number with one time losses from decline in hedges. ($10 mil - $39 mil = net loss of $29 mil).

As you can see, you are still making the same amount of money month to month, but it looks different because of accounting rules. I know this is simplistic, but that's the general idea behind the two numbers.
 
Southwest Airlines Reports Third Quarter Financial Results70th Consecutive Quarterly Operating Profit
DALLAS, Oct. 16 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV) today reported its 70th consecutive quarterly operating profit.
 
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we are still getting our profitsharing off the $69 million or whatever amount gain.

Who cares? That wasn't my point. JB did the same for me last year (or was it the previous).
 
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Let's get it on. I'll be the first to admit I've cherry picked lines and bullet points in the past. Fact is GAAP's or not, it's a loss. We can't expect to toot our own horn killing them with hedges if we don't take our lumps when we're late pulling the trigger on them.

BUT! I'm not voing for a pay freeze! $69 million profit on half empty planes is a good sign to me.

Gup
 
It goes like this:

Month 1 : You have $20 mil in fuel hedges (the value has been the same for months, oil has been stable). You bring in $100 mil in revenue and your expenses are $90 mil. Your profit for the month is ($100mil - $90mil) $10 mil.

Month 2 : Oil prices skyrocket (your $20 mil hedges are now worth $40 mil). You bring in $100 mil in revenue and your expenses are $90 mil. Your profit is still $10 mil, but you are now required to report unrealized gains from your hedging positions so you get a second number, a profit of $30 mil ($10 mil + the change in value of hedges of $20 mil). Keep in mind you did not buy or sell any hedges.

Month 3 : Oil prices tank (your $40 mil hedges are now worth $1 mil). You bring in $100 mil, expenses are $90 mil, profit is $10 mil. Once again you have to report another number with one time losses from decline in hedges. ($10 mil - $39 mil = net loss of $29 mil).

As you can see, you are still making the same amount of money month to month, but it looks different because of accounting rules. I know this is simplistic, but that's the general idea behind the two numbers.

I didn't argue the operating profit. But a bottom line loss (or profit) is a loss or a profit.

The fundamentals contained therein are, of course, a different matter.

If a company loses money, they lose money. It's that simple, imho.
 
Let's get it on. I'll be the first to admit I've cherry picked lines and bullet points in the past. Fact is GAAP's or not, it's a loss. We can't expect to toot our own horn killing them with hedges if we don't take our lumps when we're late pulling the trigger on them.

BUT! I'm not voing for a pay freeze! $69 million profit on half empty planes is a good sign to me.

Gup


Good point.

At least you can be wise enough to realize that every post in this thread is not an attack on luv or its hedges.

Good luck.
 
I didn't argue the operating profit. But a bottom line loss (or profit) is a loss or a profit.

The fundamentals contained therein are, of course, a different matter.

If a company loses money, they lose money. It's that simple, imho.


Well, if someone bases their financial decisions on paper gains and losses they are not very wise (my opinion only). The point is there wasn't money lost any more than there was money gained when oil was at $140/bbl. But, that is why there are two numbers, so that you can interpret the results as you see fit.
 

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