Southwest DIA, Frontier>DONE

[canyonblue737]

I don't know why everyone seems to think that SWA's balance sheet is so superior to F9's. Southwest is going to lose money next year if fuel prices don't drop considerably. If fuel prices stay where they are now, then SWA is slated to lose $300 million next year according to most analysts. F9 has a great product and a good balance sheet. I wouldn't be too worried.

Ahhh... SWA will make money next year. Your numbers are simply picked out of the sky.

That said I think F9 has a great product and isn't going anywhere when we arrive in DEN.

 

[chase]

The following assumption applies--load factors remain the same--the following statement:

A 1% fare increase would raise on average approximately $70m additional revenue annually. Therefore to cover a $300-500M increase in fuel costs fares would need to rise 3-5%. I've been told AA has had 70 fare raises in the last 18 months, of which 35 have held (timeframe maybe off slightly, my apologies)...that being the case most carriers have raised fares this year & those fares are sticking & revenues have increased...unfortunately these revenues have paid for higher fuel prices....our fare increases would do exactly the same "if" SWA chose to do that.


I believe that maybe the comment from one of our execs about more savings from the people side of the equation maybe tough has some merit & therefore that is why fares saw an increase this year, I believe 3 increases of $1-6 per selected segments based on mileage......can SWA be more efficient? You betcha & many initiatives are going forward to make that happen thank goodness but to say that fares "might" or "might not" rise to cover some of these costs....well, the smart folks in Dallas will do what they need to do to keep SWA in the black along with the help of the employees, I'm confident of that fact.

I'm very optimistic about SWA's future despite the potholes along the way...doesn't mean SWA or its employees can take anything for granted...we can't, listening to our customers, shareholders & employees will be the key to finding the solutions to the problems....fortunately those decisions are based off of predictions from public forums !!!!!

BTW, good luck to those in DEN with F9 & UAL...I think the competition will be good for the citizens of the front range & there is certainly enough passengers to hopefully allow all to prosper!!!

 

[chris69]

This always seems to cause confusion, and my reading of the 10Q available on the website doesn't help my understanding either, but the following is what I can glean from the numbers with my limted knowledge of accounting:
3Q/2005 $
Income before taxes: 368mil
Income taxes: 141mil or 38.3% effective tax rate
Net Income: 227mil

or, with no hedge:
Income before taxes: 368mil
Hedge: 276mil
New income before taxes: 92mil

Take out federal taxes, but add back other items such as profit sharing loss, benefits and other fees and SWA's still in the black. A lesser hedged position in 2006 will mean less profit if revenues were to remain flat, but looking at the numbers as they exist now, even without any hedges, SWA would still eke out a profit never the less. One interesting set of numbers which includes the market value of the hedges is the asset portion of the filing which shows an increase from $2.156bil on 12/31/04 to $4.109bil on 9/30/05 or $428mil to $944mil for the hedge asset alone.

 

[chris69]

Adding the other quarters.
2Q/2005
296mil
97mil
159mil
or
296mil
196mil
100mil

1Q/2005 (Includes investment in ATA)
114mil
38mil
76mil
or
114mil
155mil
-41mil

First 3 Quarters 2005
778mil
276mil (to Uncle Sam)
502mil (to SWA)
or
778mil
627mil (saved due to hedging)
151mil (net income before taxes, no hedge)

 

[canyonblue]

For those of you that doubt SWA's upcoming problems in the next few years, reference this article from last month:

Read it.:bomb: We're headed straight for the crapper, no need for anyone to worry about us.

 

[ivauir]

Sorry, I'm not worried at all. I'll be just fine.

For those of you that doubt SWA's upcoming problems in the next few years, reference this article from last month: http://www.viewswire.com/index.asp?layout=display_article&doc_id=1819496767

I read the article (and it is pretty good BTW), but I still don't see the $300 million loss you are talking about.

 

[Jetsi]

To all of the good Southwest folks,

Welcome to Denver.

I have been watching this unfold, and finally felt compelled to add my .02.

For starters, as far as I know in 34 years Southwest hasn't put another airline out of business through direct competition. If I am wrong feel free to correct me.

Another point that was brought up is that Southwest is simply taking over ATA's 4 MDW flights, so no capacity is being added. It is simply changing the planes and crews doing the work. As for the other destinations, I cannot say.

Everybody seems to be screaming that the sky is falling because SWA is coming to Denver. Are we showing "Chicken Little" on the flights yet ?

Anyway, that was my .02. Good luck when you get to the Mile High City.

Jetsi

 

[jetalc]

Another point that was brought up is that Southwest is simply taking over ATA's 4 MDW flights, so no capacity is being added. It is simply changing the planes and crews doing the work. As for the other destinations, I cannot say.

I believe they added a total of 13 flights - LAS, PHX and MDW, not just MDW...not sure about this, and it doesn't really matter anyway...

 

[canyonblue]

Yes, it is a good stable place to work now. But you never know what the future might hold! How many 1999 hires at UAL thought they were set for life?

No flames here T-Gates. I think we all know that this could all end in the duration of our careers here, but most of us just get riled up at the ones out there that just can't wait to take a jab at Southwest. As big as this Airline is we still treat it as our own, and take all attacks a little personal, sometimes a little overboard, myself included. I have not heard from one Southwest pilot how they want us to go into DEN and put anybody out of business, but many on this board are not exactly giving us the key to the city. We do tend to tire of the "Buy your Type" "Cattle Call" "Greyhound" comments that are typed here unprovoked. I do agree with you T-Gates that this could very well be an airline that I will not get to retire at, but in the meantime I will do everything possible to ensure that I have done everything I can to see that Southwest is still there when I retire. I think we all believe that "The Rumors of our demise Have Been Greatly Exaggerated".

 

[Remington]

The UAL newhires of the 90's were told to look around and see all the future millionaires around them. They thought they were the untouchables. I believe Southwest guys/gals know what can happen if they dont run their airline properly with everyone pulling their weight.
I dont think that SWA is trying to put anyone out of business; however, as a business, if you arent growing, you're dying. I hope SWA, Uni(ted) and Frontier can all prosper starting in January.

 

[GuppyWN]

I have over 30,000 fellow employees that will continue to bust our tails to take care of our customers and get them where they want to go, when they want to go safely and efficiently with a smile on their face. Fuel hedges or not if we continue down that road we'll be just fine thank you.

Gup
SWA dude

 

[Porch]

And...your point worth noting is what?

 

[Marko Ramius]

Hmmph!

The UAL newhires of the 90's were told to look around and see all the future millionaires around them. They thought they were the untouchables. .

................I must have missed that speech. Is the million still available? Retro perhaps/

 

[FlyBoeingJets]

Most critically, the hedging contracts that have protected Southwest from spikes in the price of oil will offer less protection starting in January. Paying market prices for a third of its fuel needs could add as much as $600 million to its bill next year, according to an analysis by the federal Bureau of Transportation Statistics.

The airline is already looking at 2010, when its fuel hedges completely disappear, leaving it with a fuel bill that would be $1.4 billion higher than in 2005 -- an increase equal to 20 percent of its current revenue -- if prices stay the same as they are today.

How much does a high debt load hinder some airlines? AA, for example, has to pay $1 Billion/yr in debt servicing. And interest rates have recently gone up. The good news is revenue picking up will float everyones boat.

 

[GuppyWN]

Porch,

My point was in reference to the thread creep talking about how SW was in the crapper after the fuel hedges run out. I'm you ex-brother. I hope we are successful in Denver - but not at your expense.

Gup

 

[HPaul3]

................I must have missed that speech. Is the million still available? Retro perhaps/

I heard that speech in 2000. After the "Summer of Miscontent" at United, while escorting my wife on her first day there. It really happened.

If you think there are a bunch of people at SWA who share that kind of arrogant attitude, you're very mistaken. The common attitudes I've run into at SWA can be summed up pretty simply. They are:

1) "I'm very happy to be here."
2) "There is something special about working here and I am going to do my best to make sure this continues on."
3) "There are some excellent, worthy competitors out there will keep us on our toes, so we can't afford to slack off."
4) "What can I do to help someone else out today?"

That's just my experience. Peace.

 

[TexaSWA]

I heard that speech in 2000. After the "Summer of Miscontent" at United, while escorting my wife on her first day there. It really happened.

If you think there are a bunch of people at SWA who share that kind of arrogant attitude, you're very mistaken. The common attitudes I've run into at SWA can be summed up pretty simply. They are:

1) "I'm very happy to be here."
2) "There is something special about working here and I am going to do my best to make sure this continues on."
3) "There are some excellent, worthy competitors out there will keep us on our toes, so we can't afford to slack off."
4) "What can I do to help someone else out today?"

That's just my experience. Peace.

what he said

 

[SWA/FO]

Canyonblue has a chip on his shoulder! See it, there it is...its in all his posts and even his profile. Just kidding folks...

 

[cactuspilot]

F9 will be OK. They are one of the few airlines that actually have managers that know what they are doing.

 

[canyonblue737]

I know I'm going to get flamed for this, oh well....

I have nothing against SWA, but seriously, you guys are sounding like nothing bad can ever happen to SWA. Yes, it is a good stable place to work now. But you never know what the future might hold! How many 1999 hires at UAL thought they were set for life?

I hope you guys can remain sucessful in this economic climate, but I think you are all only looking at this from one side.

Flame away....

Did UAL in 1999 have 30+ unbroken years of profits and a history of a no furloughs? SWA's history and strong management leadership (and longevity of leadership) gives us additional confidence compared to others that the right choices will be made to see profits continue in the future. I also have confidence in the ability of all the employees of SWA to make whatever choices are needed in the future to ensure we all have jobs as long as we want or need them.

Do I think SWA is immune to the dangers and pitfalls that other airlines are currently suffering from? No of course not, it could all end tomorrow, but I think most here at SWA believe that we will continue to avoid these problems not because "we are SWA" but rather we believe the people of SWA will adjust as needed as has always been the case and is backed up by decades of proof.

All this said I hope this horrible industry downturn gets spun around and a bunch of airlines, SWA included, sees prosperity and job growth.