SWA 4th QTR Profit

[Tejas-Jet]

What he said plus:
68 employees/aircraft

WOW !!! I can remember when we were almost 90 employees per airplane.

Better than the 120+ employees per airplane that was prevalent at my old legacy airline...

Tejas

 

[Aplus9]

What he said plus:
2006 profit was 587 million.
2007 95% hedged at $50.
2008 65% hedged at $49.
2009 45% hedged at $51.
Hedges until 2012 at different percentages at approx $63.
Added 36 aircraft in 2006 to bring total to 481.
2007 adding 7 planes 1Q, 10 planes 2Q, 11 planes 3Q, 9 planes 4Q. 7.7% growth for 2007.
PHL adding 5 gates.
DEN want large piece of 8+ gates being built.
Bought back $800mil in stock.
Cost minus fuel was flat.
2006 Load Factor 73%.
68 employees/aircraft

To be more specific on the hedges:

"Based on this hedge position and today's market prices, we are forecasting our first quarter 2007 jet fuel costs per gallon (economic) to be in the $1.65 to $1.70 range. We are nearly 95 percent hedged (economic) for the remainder of 2007 at approximately $50 per barrel; 65 percent in 2008 at approximately $49 per barrel; over 50 percent in 2009 at approximately $51 per barrel; over 25 percent in 2010 at $63 per barrel; approximately 15 percent in 2011 at $64 per barrel, and 15 percent in 2012 at $63 per barrel."

 

[Whataburger]

To be more specific on the hedges:

"Based on this hedge position and today's market prices, we are forecasting our first quarter 2007 jet fuel costs per gallon (economic) to be in the $1.65 to $1.70 range. We are nearly 95 percent hedged (economic) for the remainder of 2007 at approximately $50 per barrel; 65 percent in 2008 at approximately $49 per barrel; over 50 percent in 2009 at approximately $51 per barrel; over 25 percent in 2010 at $63 per barrel; approximately 15 percent in 2011 at $64 per barrel, and 15 percent in 2012 at $63 per barrel."

Thanx, my cronic lazyness kicked in when I went to type out the hedges for the 2010-2012.

 

[Big Beer Belly]

To be more specific on the hedges:

"Based on this hedge position and today's market prices, we are forecasting our first quarter 2007 jet fuel costs per gallon (economic) to be in the $1.65 to $1.70 range. We are nearly 95 percent hedged (economic) for the remainder of 2007 at approximately $50 per barrel; 65 percent in 2008 at approximately $49 per barrel; over 50 percent in 2009 at approximately $51 per barrel; over 25 percent in 2010 at $63 per barrel; approximately 15 percent in 2011 at $64 per barrel, and 15 percent in 2012 at $63 per barrel."

Last I looked oil was trading at approximately $51 on the spot market. Unless oil trades significantly higher SWA will have little, if any, advantage to its competitors who are primarily buying at spot prices. SWA has for years enjoyed significantly lower fuel prices than its competition through its wise use of hedges. It appears that economic advantage might have disappeared and if oil continues to decline those hedges could actually be negative to future earnings.

BBB

 

[jp1030]

Last I looked oil was trading at approximately $51 on the spot market. Unless oil trades significantly higher SWA will have little, if any, advantage to its competitors who are primarily buying at spot prices. SWA has for years enjoyed significantly lower fuel prices than its competition through its wise use of hedges. It appears that economic advantage might have disappeared and if oil continues to decline those hedges could actually be negative to future earnings.

BBB

That's not completely true, the hedges in place have some wiggle room to the downside built into the contracts. I'm not sure how it works but if oil is significantly lower we get some sort of break on the price.

 

[firstthird]

It appears that economic advantage might have disappeared and if oil continues to decline those hedges could actually be negative to future earnings.

BBB

Very likely true but all part of the plan. Well, not losing money on hedges but damping out costs. SWA was hedging well before 9/11 or the recent oil price spike. We do it to fix one of their costs that is either the highest or 2nd highest (with labor in a race). It allows SWA to show consistent profitable years/quarters.

Supposedly we only hedge at prices where we know we can make money down the road. So, even if oil goes to 40 dollars a barrel, our hedging team thinks we can still make money paying 50 a barrel. If not, well, then they should stop hedging.

Frankly, I'd be sort of happy if our hedges run out and we make or lose money based on our performance as an airline vs. our performance as commodity traders but I'm not the CEO (good thing for those of us here at SWA).

 

[DH2WN]

Last I looked oil was trading at approximately $51 on the spot market. Unless oil trades significantly higher SWA will have little, if any, advantage to its competitors who are primarily buying at spot prices. SWA has for years enjoyed significantly lower fuel prices than its competition through its wise use of hedges. It appears that economic advantage might have disappeared and if oil continues to decline those hedges could actually be negative to future earnings.

BBB

Yeah, oil won't go back up. Please!!!

Chart the commodities and you'll see what happens in 4-5 years.

 

[YourPilotFriend]

SWA stock should go as low as $10 in the coming weeks, perhaps lower. It is expected that SWA will deplete more available cash in stock buy-backs; perhaps all of its cash by years end. It simply can no longer support 800 million shares in the current marketplace.

 

[mdf]

SWA stock should go as low as $10 in the coming weeks, perhaps lower. It is expected that SWA will deplete more available cash in stock buy-backs; perhaps all of its cash by years end. It simply can no longer support 800 million shares in the current marketplace.

I thought the bankruptcy wasn't supposed to be until 2009. Are you moving up your projection?

 

[slaquer5]

Last I looked oil was trading at approximately $51 on the spot market. Unless oil trades significantly higher SWA will have little, if any, advantage to its competitors who are primarily buying at spot prices. SWA has for years enjoyed significantly lower fuel prices than its competition through its wise use of hedges. It appears that economic advantage might have disappeared and if oil continues to decline those hedges could actually be negative to future earnings.

BBB

If you feel that way you should have been saying this for over 20 yrs. We have been hedging for over 20 yrs, its just now that we are getting all the press on it.

 

[737 Pylt]

Could have bought GOOG and retired. Airlines are a waste of money and time.

I'm with you. I woldn't give .02 (the price of 400ahole/lawman/chuck) for airline stock!

737

 

[Skyboy722]

It is expected that SWA will deplete more available cash in stock buy-backs; perhaps all of its cash by years end.

It is expected? By who? You? All of its cash? Wow.

 

[Benhuntn]

YPF, I do think we have too many shares of stock. But I think we are better off buying jets and putting them to work and increasing our net worth than we are buying back stock. You make good arguments though. I read an article on MSN money. For what it is worth, Jubak picked SWA as the stock to watch for 07. I think if you believe what you state here you should short our stock with a strike price of 10. Call me when you make the big bucks.

 

[Jim Smyth]

SWA stock should go as low as $10 in the coming weeks, perhaps lower. It is expected that SWA will deplete more available cash in stock buy-backs; perhaps all of its cash by years end. It simply can no longer support 800 million shares in the current marketplace.

You are so clueless!

Ya, maybe we should file for bankrupcy to take care of our current problems..........................

 

[YourPilotFriend]

You are so clueless!

Ya, maybe we should file for bankrupcy to take care of our current problems..........................

Justify the current stock price.

 

[Quimby]

SWA stock should go as low as $10 in the coming weeks, perhaps lower. It is expected that SWA will deplete more available cash in stock buy-backs; perhaps all of its cash by years end. It simply can no longer support 800 million shares in the current marketplace.

are you and Lowecur buddies?

 

[YourPilotFriend]

YPF, I do think we have too many shares of stock. But I think we are better off buying jets and putting them to work and increasing our net worth than we are buying back stock. You make good arguments though. I read an article on MSN money. For what it is worth, Jubak picked SWA as the stock to watch for 07. I think if you believe what you state here you should short our stock with a strike price of 10. Call me when you make the big bucks.

You simply can't add enough planes to boost revenue up to projections without increasing fares. The problem is SWA has priced its product so low, it can no longer afford to fly on its own routes. It will turn a profit, but at what cost to shareholders. If I buy their stock right now, I'm basing that purchase on whether or not SWA can earn at least $750 million for the stock to hold value. Based on the hyped projections of some of these so called analysts, they predict SWA will turn a profit of $1.2 billion. It's possible, but highly unlikely.

 

[Whataburger]

Southwest will never make it...............35yrs and counting.

 

[bravodude]

Why do you guys bother with that fool. Just ignore him like all of his friends.