SWA posts $162 Mil Net Income/ $.22 per share

[RedDogC130]

I wish I had a link to our latest union paper that explains the study that was done on CASM, fuel hedging, and such for our negotiations. Made my dumba$$ understand it more.

 

[luckytohaveajob]

Lucky, you prove your ignorance on how SWA uses its hedging program. You cannot say hedging was $189M and profits were $162M, therefore we really had a $27M loss. It is not that simple!

You are right. The 4th quarter is the one that matters. But the 2nd and the 3rd are the big ones with the losses in the 1st and 4th.

Poor third quarter results are forward looking indicators.

Nice to see all you SWA cheerleaders are all so thin skinned. It will be easy to skin you alive when times get tough.

Step away from the cool aid.

Take control of you union and send those age 65 guys packing and SWA might be CASM competitive during the next five years.

 

[JumpJetter]

What does Jim Rome say?

SCOREBOARD!

 

[kelbill]

Lucky,

Recall also the ONE TIME costs of $36mil NOT INCLUDED in the $162mil profit, so the real profit was $198mil. Doing some math, even misconstruing the hedges as you have tried, equals a profit no matter how you count it. $198mil is more than your hedge bean count. SWA takes hedging into account when it does its pricing and flight schedule. Take hedging out of the equation, and walllah, we get different fares and a slightly different flight schedule.

By the way CASM, ex-fuel, was flat except for that $36mil one time charges I pointed out above. Sounds like our costs aren't going through the roof after all.

18Oct07 MarketWatch

Fourth-quarter outlook

For the fourth quarter, Southwest has hedged 90% of its estimated fuel consumption, capped at an average crude-equivalent price of $51 a barrel, and now sees its fuel costs rising to $1.80 a share in the fourth quarter.
CEO Gary Kelly said the company has started to slow capacity growth this quarter. Southwest announced plans to trim growth rates in June, with an initiative to add over $1 billion in revenue by 2010 and $10 million to profit in the fourth quarter.
"We will soon announce enhancements to our fare structure and Rapid Rewards frequent flyer program, supported by a new marketing and advertising campaign," he said.
He anticipates fourth-quarter operating unit revenue topping year-ago levels.

Now correct me if I'm wrong, but that is about as much hedging as we've ever done and that oh so important 4th qtr appears to be ready to do well this year. How can the 2007 3rd qtr results be such a bad omen if we made more hedge money in 2006 3rd qtr? Not thin skinned, just not thick headed.

JumpJetter had it right:

SCOREBOARD!

 

[PCL_128]

Doesn't SWA still have the lowest non fuel casm in the industry?

Nope, that title went to AirTran this year. SWA does still have the lowest CASM including fuel, though, thanks to their hedges.

 

[luv2fly]

It doesn't matter if the hedges are running out. The revenue is not meeting the costs. The hedges are just temporarily covering the losses.

The 3rd quarter would have looked like a MINUS $27M loss without the hedges. Operationally the airline is operating at a loss.

SWA only profit center is it's secondary business the Fuel Office which hasn't closed it doors YET! I thought SWA was an airline.

Our hedging program has been around for over 20 years. If you knew anything about them you would no that they don't "run out". They are traded on a daily basis using normal option methods (puts and calls), so they are actually not ever sold. They only way we could "run out" is if we start selling the options out right.

Now, we are still maintaining our hedging program, but our price equivalent to jet fuel is going up. So the hedge gains will not offset the increased cost of fuel as much.

We were hedging before 9-11, why not the same attention then as now. Why don't you go back for 20 years and subtract out our "hedge profit" from all of quarterly profit to find our "real" profit. Why you are at it subtract out the liquor sales, money saved due to efficient scheduling of pilot/FA/aircraft, fuel saved from efficient profiles...etc.

 

[kelbill]

luv2fly has obviously had some book learnin' before coming to SWA. Good reply.

 

[andyd]

Did anyone else watch Garry Kelly on MSNBC Squak Box this morning? The pro-mo's for the segment led the viewer (me included) to believe than he would be speaking about SWA's earnings and meeting predicted targets. What I think the REAL story was and the more I listened to it the more I was amazed at hearing: He spent nearly 5 minutes talking about CONSOLODATION and MERGER! He stated that SWA would take a serious look at it, be "pro-active" and a dominate player and that they were a "growth airline". If anyone can get a transcript of this mornings interview it is very enlightening to listen to what he is saying "between the lines". Of course, he may just be shaking things up a bit like Tilton....any talk of a merger, of course with SWA being the dominant partner....is sure to raise the stock ticker.

 

[atldc9]

here is a link to the interview:

http://www.cnbc.com/id/15840232?video=565995190&play=1

 

[eagleb2skipper]

Nice to see all you SWA cheerleaders are all so thin skinned. It will be easy to skin you alive when times get tough.

Wow, lucky, you just can't coach that kind of retarded remark.....that's raw talent! Dude, get off the Dungeons and Dragons chatroom, tell your mom you're coming upstairs for dinner, and pick a fight with somebody who cares what you think!

 

[BOOZENEWS]

Your operation is losing money and your making it on the hedges. And the hedges are declining and when they disappear SWA will be posting RED INK.

Uh I don't think so. SWA can raise fairs to cover the cost of the hedges dwindling since they have pricing power. Ever notice as soon as SWA raises fares the legacies follow. Its rocket science

 

[luckytohaveajob]

The problem is the trailer park traveler will only pay so much to fly before they decide its to expensive. Tickets over $159 are going to decrease your loads.

SWA is not a premium brand.

Starbucks charges $4 dollars a cup and gets it. McD's could never sell a $4 cup of coffee even if it was the same kind of coffee.

Now a company like Virgin USA, has the potential to be a premium brand and could charge a four digit fare without offending its core consumer.

SWA is a low three digit cap. High four digits make money even with $100 oil.

 

[328dude]

Volume sometimes outweight's outrageous four digit fares.

Seems to work for us, as we fly more people than any other US Airlines even the legacy's. Suits or tank tops, it dosen't matter. The dollar spends the same no matter where it comes from. Only diffrence is we use Febreeze more offen.

 

[airline#5]

"Nope, that title went to AirTran this year. SWA does still have the lowest CASM including fuel, though, thanks to their hedges."
_________________

Hey PLC, you can partially thank the industry leading FO pay for this. Anybody else having trouble paying there bills at the end of the month? Let's make some noise on FO pay this time around. Tired of hearing these Tranny Capts say pay isn't the issue here. It is for us! Sorry for the off topic. I've had it with my SWA FO friends laughing at my paycheck. None of which are "SWA material" any more than those I know who've been turned down. Everyone knows success in this industry is timing and luck. As I now have to say, "be nice to your FA, she may be your Capt. some day"...a situation I recently experienced.

 

[328dude]

As I now have to say, "be nice to your FA, she may be your Capt. some day"...a situation I recently experienced.

That's great!!. I gotta hear that story. Do tell.