Southwest - Profit!!!

[FlyBoeingJets]

Again, this is no prediction. It is based on past historical data from the DOT, so I'm sure it's spot on. Airline Mgt has been known to call analysts on their statements. Let's see if Gary Kelly has any comments on this.

imp:

Tell me, is cargo and mail factored into the equation with the DOT info?

If not, it is not valid determiner of the profit on a flight. This is a razor thin profit margin industry and everything counts.

For example--The SWA decision to give U.S. mail the boot is expected to INCREASE revenue for SWA. The mail is heavy for the money and is very time consuming. The demand for cargo is high and has a much higher profit margin. We have to bump cargo for mail until the end of the month. It's not a sure thing, but SWA management is very hopeful cargo will make up the difference.

 

[Tejas-Jet]

Actually, Holly Hegeman quoted this guy in her newsletter last week. She said he is considered the top analyst on SWA. Imagine, all this coming from the mother of a son who is a pilot for SWA.

I thought it was Holly's brother that was a pilot for SWA...at least that was the rumour a few years ago....now she also has a son who flies for SWA?

Do you have a name for these guys? Where are they based? Capt or F/O?

Just wondering....?

Tejas

 

[B737Dvr]

another great topic!!!!

Gorlla,

Interesting point....some thoughts though....what's the seating capacity on a 787...something in the upper 200's or mid to low 300's I think...not sure.

So for argument sakes, the airplane carries 2 or 3 times the number of a 737 size aircraft. Cost efficiencies will be signfiicant according to Boeing with this airplane. However, lets look at some other issues.

How frequent will those flights fly? Once an hour, 3 times a day to the various destinations? Are they economical on short hauls or just long hauls? Obviously many factors but lets look at just one & it is one that SWA has realized for a long time.

What do travelers want besides safe flights, low fare, good customer service, get bags there? What is unwritten but important is frequency...convenience to fly, pick the best time. Having a smaller airplane (i.e. 737 or similar under 150 seat airplane...could be a 787 smaller version) to still do continental flying provides the flexibilty SWA's system's needs....I'm not saying bigger airplanes are not in their future, the ability to have more flights in a day allows the system to flex when an aircraft is out of a system and the amount of frequncies or various means to get passengers to their final destination is a tremendous advantage not fully understood by many....bigger isn't always better when it comes to "flexibilty" in adapting to irregular operations.

When a 300+ seat aircraft crumps the ability to get those folks to their destination is significantly different than when a 137 seat aircraft crumps that is in a system where multiple flights are flying that route or through other point to point places during that day. Having bigger but fewer mouse tunnels for the mice to run through isn't necessarily better...if one crumps, everything gets backed up......maybe better to have more routes (smaller in size but still allows them to get from point a to point b) for them to get to their final destination....all they want to do is get there & be assure they are going to do it quickly, easily & safely. BTW, no harm were caused to any mice in this example or used in any airborne experiments without PETA's permission.

This 787 is going to revolutionize future R&D goals with respects to new aircraft design, implementation and eventual construction........not to mention airline economics and strategic direction. Going out on a limb here and it may even perhaps be the aircraft to replace the 737, 757, and 767, 777 lines. This 787 is shaping out to be like the 737 of yesterday, only difference is that today's aircraft are designed with future stretch and mini versions in mind. This 787 I believe will hold #'s comparable with 739 aircraft and as much as a short 777.
Now, chase has a point about what southwest does vs the majors regarding overwater/international flying and the logistics, economics and support involved. When a SWA plane breaks down, there are 10 other flights behind it, but when a ORD to HNL or AUA breaks down, you've got a logistical problem with the bigger aircraft. Perhaps SWA has been smart to stay away from that to avoid any and all challenges associated with it and just focus to continue to do what they do best.....domestically. Perhaps they were smarter to "invest" in ATA and it's assets, thereby getting among other things, the ability to list international destinations at virtually little to no cost (instead of going out and starting from scratch) while reaping revenue and new pax that would perhaps have never flown them in the first place.

Now about their future and for that matter everyone else's with regard to aircraft replacement. When their older 737's and even the NG's become the equivalent of today's 727's and Md80's they and everyone else for that matter might be facing interesting options. 15-20% better operating economics on a CASM basis is a hell of a leap! Couple that with it's it wide ranging options regarding size and range, easier mx, single type for training costs etc.... and that is why i say it could very well replace the above named aircraft.
Scenario: CAL or AMR get 787s to replace some 737's. They run the 787 in the carribean and reap the multiple benefits from using them. Aircraft breaks down; they could now use a spare 737, 757 (with comarable seating) to fill in, and in the absence of one sitting at another gate, they could fly one in ASAP to cover the trip. Point is, the 737's on those flights now could very easily be covered by a 787 (with 20% better economics) and in the case of a mx issue, an older plane could now come to the rescue! add in transcons and maybe high density high frequency routes like NYC-FL markets and it will make a big difference come earnings reports times.
Question: How could SWA respond to this and the future? Face it at some point or another they could either stick it out with the 737's or face a massive replacement issue with it's whole set of costs and logistical procurement. Who knows at that point who is going to be around, what the economy will be like and how much more expensive oil will be?

One more thing, I wonder if the 787 will do the same thing to blended winglets that the 707, DC-8 and the Comet did to the airline turboprops like the Electra back in the 50's? 20% or 2% hmmmmmm??????

 

[B737Dvr]

Most of this is in good fun. What I find is: some can dish it out but can't take it when it comes back to them. I know LUCK plays a huge role in where one ends up. This is no different, however I also believe one creates their own luck. I made the calls, I applied and worked hard for this. I continue to work hard (some would laugh at this) everyday to keep this Company going.

My PM function works. Why call a SWAPA brother out in the open? Until next time America - the SWA/FO is outta here!!!

SWA/FO, I believe that faith has been restored at least on this board and topic that not all WN pilots are like you. Someone tried to do it way before on this topic (hint at some humility and to remind you of your incredible fortune and envious position), but you basically told him to *&^#@! off and retire!

Sometimes the best luv is tough luv!

 

[Widow's Son]

Holly's brother Dick Hegeman was a Morris pilot who came over on the acquisition. He was older when he came over and only had ten years or so before retiring a few years ago. Great guy. Last I heard he was living in Colorado and flying hot air balloons.

 

[SWA/FO]

SWA/FO, I believe that faith has been restored at least on this board and topic that not all WN pilots are like you. Someone tried to do it way before on this topic (hint at some humility and to remind you of your incredible fortune and envious position), but you basically told him to *&^#@! off and retire!

Sometimes the best luv is tough luv!

Did the SWA/FO really do that? He doesn't remember. I'll ask him again........... he says, he doesn't remember.

 

[Gorilla]

The Gorilla likes this third-person mode of discussion.

The Gorilla also thinks B737Drvr brought up an interesting point - frequency. SWA has always had a potent schedule with regards to frequency. If there are 8 daily to a particular city, and one of them craps out, the impact economically and on passenger service is nowhere near as bad as the one-a-days to distant international cities. If the single DFW-BZE flight dies, then there are simply no more that day unless a spare aircraft is available. Passengers are rightly livid, and AA coughs up serious cash to keep pax happy and returning to AA.

There are all kinds of small costs that really add up once international destinations are offered. The much hated hub and spoke model is actually a very good method for very low-frequency, international long hauls. Gotta get the people to the big jet for the one departure to Dublin, for example.

 

[chase]

b737,

Having a "spare" aircraft around sounds good but is a killer on the bottom line....having a spare to cover a 787 type, even several that would be required to cover the additional folks is I think a little unreasonable.

I would agree (Herb was asked this question earlier this year at Boeing & he commented as such) that having a <150 seat version of a 787 aircraft with 25% less operating costs, is a possibility if the 787 comes on line as promised. However, as Boeing has announced the delays in the 787 outsourcing of suppliers is beginning to cause problems (not in the magnitude of Airbus mind you but still a problem), so the assumption something smaller is in the offering isn't a foregone conclusion by any means.

What is plausible though are 737 options that SWA may have in 2012 & beyond convertible to an airplane that seats 149 folks (increase in productivity over what a 737 currently does), has a 25-30% cost advantage in mx & fuel costs & has IFE wireless/next generation technology that leapfrogs much of what is out there thereby allowing the buyer to forego current costs that are exorbitant & don't match what the traveling public will need in the future in terms of IFE. If fuel is continue to rise & hedges become more expenses, it makes sense to find productivity gains & cost savings on these large expenditures, new aircraft & their operating costs.

For now the 787 is a test bed for smaller aircraft that will be useful to SWA & other "fequency/LCC" companies....larger isn't always better if the costs to go larger increases costs.

In terms of international flying....there is much low lying fruit out there right now & in the future that SWA is having a hard time meeting demand for that doesn't require international flights.....before the announcement if you had asked folks, "Does SWA fly non-stop from DTW-BWI?", most folks would've said "of course they do."....in fact they don't but now they will with the recent announcement of 4 non-stops a day between the two cities.....how many other city pairings are like that which need to be connected without spending money on new bases, international costs, lobbying efforts or recertifying aircraft for overwater ops? Reaching up on the apple tree to pluck fruit that is hard to reach or isn't completely matured while bumping your head against fat/money filled apples much lower makes a lot more sense & put less stress on your back & bottom line....I'm all for more money with less risk. There are plenty of other city pairs along with the old adage of the "Southwest effect" that isn't dying by any means.

The future isn't guaranteed & the path SWA will take isn't as clear as it use to be but that is because the world is getting flatter thanks to many factors & SWA is responding accordingly with innovative & smart decisions that are graduated, well thought out & profitable for shareholders & employees....& yes the customer benefits also!!!! That part of their strategy hasn't changed in 35 years.

 

[SWA/FO]

The Gorilla also thinks B737Drvr brought up an interesting point - frequency

the SWA/FO has stated this point before. He wonders why no one remembers "the good" posts only the "bad" ones?

 

[B737Dvr]

lol

the SWA/FO has stated this point before. He wonders why no one remembers "the good" posts only the "bad" ones?

B737dvr loves the 3rd person speak is is fluent in it! lol He starting to likey SWA/FO since he playing nice!

He also in agreement with chase once again regarding spares and domestic vs international flying and in concentrating on the lower (and lower cost) demand than in back and bottom line breaking flying. When b737dvr was talking about spares, he was not talking about having dedicated spares just sitting there for that specific purpose, but simply that a CAL or SWA with their vast #'s would have much more chances that they would happen to have a spare available when things go wrong. Highly likely hood that a spare 739 would be available than a 777!

HE has one more question to all....off topic, but with how well SWA is doing and all, why dey still make people get dey own type befo they get hired?
dont they still have to go thru the training anyways?

tanks!

 

[Benhuntn]

"Your Pilot Friend"

I have done much research to validate your numbers on SWA debt. I used several stock research engines. I came up with this ratio.

SWA has $ 1.00 dollars in the bank for every .28 cents of debt. Using my public education I have been unable to make that equal 2.9 billion of debt. With the exception of some leased aircraft ( 80 ) we own most of our jets outright.

As an example I will give the the debt of some other LCC's:
JBLU - for every $ 1.00 in the bank they owe $ 2.51
AAI - for every $ 1.00 in the bank they owe $ 1.31
Many legacies have much higher debt ratios along with much higher CASM's than SWA.

I think we look solid for at least a few more weeks.

P.S. Keep after them SWA/FO, your always fun to read.

 

[Falconjet]

Falconjet likes his chicken spicey.

But he doesn't think that SWA/FO comes off as funny, nor does he represent his company very well.

But that is just FJ.

FJ

 

[SWA/FO]

Falconjet should know that the SWA/FO is 1 person out of 35000 at Southwest Airlines.

 

[Benhuntn]

Did SWA/FO ever say he represents SWA? I don't think so. He just is just a spokesman for those of us that are happy to be working at God's gift to airlines. I think you guys are just a little thin skinned, and maybe jealous because you aren't as quick witted.

 

[FlyBoeingJets]

He just is just a spokesman for those of us that are happy to be working at God's gift to airlines.

So SWA/FO is your spokesperson??

Well I have a posse...so there!!

BTW, SWA/FO is not my spokesperson or in any way represents how those I know at SWA feel about other airlines.