Southwest Airlines Reports Loss

[Flying the Line]

Profit sharing, who cares, I get 12% from big brown whether they make the normal 1 billion or less like less Qt of 820 mill. The problem with your retirement is its tide to profit sharing (minus 7% 401K, which every fortune 1000 corp offers, so nothing big there), thus if things ever go south over half of your retirement savings goes with it. You guys need to get a b-fund and get rid of profit sharing so when the day come (and I hope it doesn't) and profits slip or go into the red your still covered. Remember we are only one president away from a new war, one CEO away from some bad decisions that sink companies etc.

You left off B737 on your A/C flown, are you sorry you left yet?

 

[The Prussian]

Just remember this is the same guy that started a hedgefund. The same type of fund that has been blamed for helping us get in this mess. If i were you I wouldnt take economic advuce from someone that posts on FI.

Bravodude...thanks for your headsup. As Andy indicated, he and I have not been in total agreement on past issues. But, I do value his viewpoints, as well as many others on this forum. It's all good to me so long as it does not devolve into studio wrestling, at which point I get bored. As it was, Andy gave me a full nickle's worth, for which I am very appreciative.

 

[Andy]

I guess WN is selling it's positions for 2009 according to a spokesman and analcyst at UBS:

For now, Southwest said it will back off its hedging strategy, though that could change if oil prices rebound, spokeswoman Brandy King told me.

"In the current environment of falling prices, it's probably better to be 'less' versus 'more' hedged, thus we are lightening our hedge positions," she said.
For the first time in many years, Southwest will essentially have no hedging benefit for fuel next year if oil prices stay at their current level, UBS analyst Kevin Crissey said in a report.
That would eliminate a key financial advantage that Southwest has enjoyed over its rivals.
It also would reduce the Bizarro effect on the carrier's earnings.

You are going to see a probable spike to the $80 or $90 level in the next few months if a cold winter is forecast, and OPEC sticks to a cut of 1M bbl at their upcoming meeting

imp:​

... and that's why Southwest has some of the smartest management in the business. Even with a cold winter, oil prices will continue to fall. Too much demand destruction.

 

[Andy]

Just remember this is the same guy that started a hedgefund. The same type of fund that has been blamed for helping us get in this mess. If i were you I wouldnt take economic advuce from someone that posts on FI.

Where do I start?

As previously explained to you, there are two partners in my hedge fund. My mother and myself. I am not seeking outside capital and have turned away several interested parties.
The hedge fund's investment strategy is the same as when I was trading multiple individual accounts so there's no change in how I deploy the capital.
I started the hedge fund for three reasons:
1) To consolidate multiple accounts, allowing me to move more nimbly in a choppy investment environment.
2) It allows my mom and I to take advantage of certain tax loopholes that are very advantageous.
3) I am now able to charge my mother management and performance fees. Given that I've made her a lot of money and have spent thousands of hours doing so, I think that it's reasonable that I be compensated for my work. I no longer work for free.

The inception date of my hedge fund was 15 August 2008. I hardly think that my hedge fund, with less than $5M in assets, is responsible for the current economic malaise.

I offered The Prussian no investment advice, nor do I dispense it freely.

Your ignorance over how broad the investment vehicles that fall under the name 'hedge fund' is laughable. This last spring, the hedge fund universe consisted of more than 8000 funds with diverse investment strategies. Some are extremely conservative and others are extremely aggressive. The funds invest in many different asset classes, with many specialty funds.
To paint all hedge funds with such a broad brush is extremely humorous. You are the quintessential Joe 6 Pack who is too lazy to educate himself on the facts. Just keep that cranium case disengaged and continue to watch your sports programs. Juvenal (Roman author) was correct in his assessment that the masses are easily controllable with Bread and Circuses.
I would attempt to educate you on the real root causes of this country's current problems but I am unwilling to engage in such a futile task at this time. I will, however, inform you that part of the problem lies with the person who looks back at you in the mirror daily.

 

[Lowpayisgreat]

No, Not sorry I left. Since I left SWA I've gotten a 757,767, and 747-400 types from UPS, and lots on heavy jet international time. I live in domicle (they paid 100% of my move to include all real-estate and closing fees on both sides etc) and fly on average 3 days a month and go to my reserve unit m-f and work for them while on call. So since May I'm averaging $18,000 a month pretax from both jobs. With the DHL thing around the corner after the election (if things go as planned) we will see a 30% growth in the company from that transaction alone over the 36 months from start to finsh( 10% yr). No I don't get to hang out with hot flight attendents, but I have plenty of asian hotties if I so desire and I don't have to worry about sexual harrasment coming out of left field. In addition, the cargo projected growth is alot better then US domestic pax flying projected growth, with China and even more so with India becoming the new China by 2015. Overall I find myself less fatigued (only due day flying in the 747, 90% of the time and all flights have IRO) and lots of time off to party and explore places like PVG, HNK, HNL, etc etc. We have great meals, more then you could or should ever eat. You don't have to do the flight attendent dance to take a piss, you just get up. Overall from my perspective having flown for 4 pax carriers (TWA, AA, F9, SWA ) and one Frac, this is the best gig ever. Nothing agianst SWA, but unless you have experienced both you just don't know how much better it can be. Now I know you will come back with UPS hates pilots etc, but my ACP's and training have been no different then anywhere I've worked and they are all just good guys. And really how often do you interface with managment guys anyway. If your answer is yes, your doing somthing wrong and should stay below the radar. UPS is all business and they expect you to show up on time and move the jet and if you don't they want to know why and you better have a dam good reason. Not much different then the military. Its business, and they are in it to make money. Both places great to work at, but I'm glad I'm here, and hope things stay as good as they are now, nothings given in this industry. Todays company to work for is the pig of tomorrow (UA of the 90's and then now).

 

[bravodude]

Where do I start?

"As previously explained to you, there are two partners in my hedge fund. My mother and myself. I am not seeking outside capital and have turned away several interested parties.
The hedge fund's investment strategy is the same as when I was trading multiple individual accounts so there's no change in how I deploy the capital.
I started the hedge fund for three reasons:
1) To consolidate multiple accounts, allowing me to move more nimbly in a choppy investment environment.
2) It allows my mom and I to take advantage of certain tax loopholes that are very advantageous.
3) I am now able to charge my mother management and performance fees. Given that I've made her a lot of money and have spent thousands of hours doing so, I think that it's reasonable that I be compensated for my work. I no longer work for free.

The inception date of my hedge fund was 15 August 2008. I hardly think that my hedge fund, with less than $5M in assets, is responsible for the current economic malaise.

I offered The Prussian no investment advice, nor do I dispense it freely.

Your ignorance over how broad the investment vehicles that fall under the name 'hedge fund' is laughable. This last spring, the hedge fund universe consisted of more than 8000 funds with diverse investment strategies. Some are extremely conservative and others are extremely aggressive. The funds invest in many different asset classes, with many specialty funds.
To paint all hedge funds with such a broad brush is extremely humorous. You are the quintessential Joe 6 Pack who is too lazy to educate himself on the facts. Just keep that cranium case disengaged and continue to watch your sports programs. Juvenal (Roman author) was correct in his assessment that the masses are easily controllable with Bread and Circuses.
I would attempt to educate you on the real root causes of this country's current problems but I am unwilling to engage in such a futile task at this time. I will, however, inform you that part of the problem lies with the person who looks back at you in the mirror daily."




The person that looks back at the me in the mirror daily is not a person like yourself who has to use insults and name calling to prove his point.

 

[Hose A. Jiminez]

There are a few who leave SWA for UPS, but many more vice versa. Freightdoggin' aint for everyone. Enjoy UPS. Compensation is good if you like that kind of flying.

 

[Hose A. Jiminez]

He did say he was more concerned about the lack of future revenue from a downturn than the hedges, so I'm sure he had a good laugh at the finger pointing. One Q will not be a determining factor as to how he manages the hedges. Let's see how he does in the next 12 months, if oil prices put(no pun) the majority of his positions under water. If oil averages between 80-100, he's fine.

imp:​

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.

 

[Scope out RJ's]

The person that looks back at the me in the mirror daily is not a person like yourself who has to use insults and name calling to prove his point.

No, the person that looks back at you in the mirror is someone who was extremely lucky to get a pft job, and likes to celebrate in others' failures.
Well, welcome into the pool of money losing airlines kid, the waters warm!

 

[contrail67]

No, the person that looks back at you in the mirror is someone who was extremely lucky to get a pft job, and likes to celebrate in others' failures.
Well, welcome into the pool of money losing airlines kid, the waters warm!

extremely lucky to get a pay for training job?...pft....

 

[Fly-n-hi]

I think its interesting to note that for several years Southwest was so far ahead of everybody else. Then in the last few years they've only been kinda ahead of everybody else. Now they're barely ahead of everybody else. The gap has definitely closed. I'm not suggesting that Southwest is in trouble or anything like that but the industry is definitely adjusting.

Now this isn't a slam against Southwest at all. I would like to see them...and everybody else do well. I think that's good for the industry as a whole. But historically speaking, no airline stays on top for more than a few years. That's just the cycle of the airlines.

 

[Lowpayisgreat]

I don't know anyone who has left UPS in the last two years for SWA. And when you mean that kind of flying, do you mean were the pay is good, layovers long, in great destinations, stabl industry (cargo vs pax) no kidden future and on and on and on. For the last 20 years I have watch guys like you who thought their companies were bullet proof (USAir, UA, AA etc ), only to have it go down the crapper in 10 years or less. It seems the most humble guys are those that realize that, and don't gloat at another companies downfall or wish for it. The problem with this industry is everyone is an expert but really doesn't have the edcation to back it up (very few MBA's). In additon, their are some many young guys who just like to throw spears verses reading and learing from the history books about this industry. The world is changing. The consumer in the US is getting squeezed and will continue reagardless of recession or not. He/she will look for the cheapest ticket for the time period they want to go, period. Things will never be as good as they use to be for the middle to lower middle, blue collar working class in America. As a result, everyone is price sensitive. That you can all ready see at SWA and other carriers (stated by Gary Kelly many times) there is very little pricing power. As some point the price is just to great for "Joe the plumber" to take that trip or he will take less getaways. The wal-martization of America has arrived, first with Textiles, Steal, manufactering, medical (Doc aids) and now to the pax industry. When this happens pay falls, benefits fall and good ol days are gone. This will happen to the cargo side but will take longer and may not be as severe. My problem with the pax side is I was tired of supplementing my income to pay for someone elses vaction. Do we see doc's charging less just to get the people in the door. No, you pay what he charges because they maintain a pay standard. This will never happen in our industry. Someone is always willing to fly for cheaper to build the time to get to the big boys, but there only two great paying places left (UPS and Fedex). US pilots have and will continue to make more overseas flying the same equipment. So gloat and enjoy it, times will change and it won't be for the good. How many times have I heard "the pay will come back in a few years". Its not, and what you see at AirTran, Jetblue and UA are what you can expect. If you are higher expect to be uncompetitive in the market. Remember 90% of being a good CEO is being a good saleman and making your empolyee really believe they are different and shoud do what you want for "good of the company" Good luck and keep in mind, those good overseas flying jobs that make bank are looking for guys with Heavy International time (767,777,747)

 

[Scope out RJ's]

extremely lucky to get a pay for training job?...pft....

PFT=Pay for Training.
He had to go out and PAY for a type rating to get hired at SWA!

 

[StopNTSing]

PFT=Pay for Training.
He had to go out and PAY for a type rating to get hired at SWA!

How do you know, 737Pylt? Perhaps he EARNED the rating while employed at ANOTHER airline...or the Air Force...or the Navy...

 

[Bob_Sacamano]

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?

And for the record, I'm not the "most cultic SW employee" around. But it's cute how much glee you're taking from a book value loss. That whole loss is based on the current market value of the hedges, not what we're currently playing for fuel, or what we settled the hedges at.

All I've got to say is: TOLD YOU, TOLD YOU, TOLD YOU.

SW wasn't able to make money in this environment without their hedges. Their own CEO has said this many times over the past year so this should come as no surprise to anyone but the most cultic SW employees.