SWA profits off 77%

[RedBelly]

God, what a bunch of crap this thread has turned into.

If you would look at SWA's 3rd quarter in-depth, you would see that their unit costs, excluding fuel and one time items, actually decreased from 3rd quarter '05.

 

[firstthird]

It will be interesting to see how the rest of the industry does. This whole bashing of SWA stock by the market seemed to be precipitated by CAL reporting 250 million while we reported 50 million. Which, excluding the one time gain for them and loss for us, 150 million each. Not our best quarter but hardly a sky is falling type of assessment. Boyd has been predicting the demise of the LCC model for years so he is only to happy to pile on.

I also thought that the CASM ex Fuel going down was significant, in a good way. We definitely still have some fighting left to do, and always will, but I'm pretty sanquine about it for now.

 

[Skyboy722]

Why I caution everyone, is because in my opinion, SWA will be in bankruptcy without major labor cuts by 2009.

Bummer. Guess I should quit now and save myself the hassle.

 

[canyonblue]

I think it's high time SWA raise fares some more.

A Northwest pilot talking about raising fares, now that's a laugh. I thought you guys didn't understand the phrase. uke:

 

[FlyBoeingJets]

Why I caution everyone, is because in my opinion, SWA will be in bankruptcy without major labor cuts by 2009; in-so-far my timeline is holding up.

The major revenue generators will be international packaging and business travel. The foreign airlines know this and are it current talks with the legacies about possible mergers. By that time either SWA will be merged into one of the major global airlines or it will be pieced off to either of the big three.

If I buy into your assumptions, I still can't come up with 2009 as a BK year for SWA.

It took much longer for Delta and NWA to go into BK after 9/11. They were both in trouble earlier in 2001 but didn't go into BK until 2005. I would start the clock the year SWA starts posting losses. Then I would assume at least 3-5 years until BK.

Why? Ability to get loans. That's how Delta stayed out of BK so long. They hocked everything. SWA starts out in MUCH better financial shape than an Legacy was in before 9/11.

As a side note, things fell apart about a year after they signed a very lucrative pilot contract. (late 00 or 01)

Could we compare SWA to UAL? I doubt it. UAL spent big bucks on a failed merger and stupid business jet (a la netjets) idea. They entered the post 9/11 world with one foot in the grave. They looked sick compared to AA and DAL. Not the case here.

My Prediction: Even with all the fears of collapse in years past, UAL is shaping up to be THE dominant legacy going forward. They want a merger so they can dominate another carrier and the entire industry. If anyone's management likes mergers I would be looking at UAL work rules and pay rates.


Now I don't particularly buy into your assumptions, but lets tell a more complete story here. 3 years from profitable quarters, low debt, fuel hedges, STILL lower CASM than the legacies, only 68 employees per airplane, new airplanes coming 3/month, and cheapness of one airplane operations to BK?? If JetBlue was still a profit machine and Virgin USA was operating it would make it more plausible. Now if oil were to plummet to $40 a barrel I could see some issues at SWA. That would be a story starter.

 

[FlyBoeingJets]

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0000092380-06-000020&Type=HTML

Liquidity and Capital Resources


Net cash provided by operating activities was $1.3 billion for the nine months ended September 30, 2006, compared to $2.1 billion in the same prior year period. The operating cash flows in both years were largely impacted by fluctuations in counterparty deposits associated with the Company’s fuel hedging program. There was a decrease in counterparty deposits of $270 million for the nine months ended September 30, 2006, versus an increase of $865 million during the nine months ended September 30, 2005. The decrease in these deposits during 2006 has been due to the decline in fair value of the Company’s fuel derivative portfolio from $1.7 billion at December 31, 2005, to $1.3 billion at September 30, 2006. The increase during 2005 was primarily due to a large increase in the fair value of the Company’s fuel derivative instruments, as a result of escalating energy prices during the first nine months of 2005. Cash flows from operating activities for the nine months ended September 30, 2006, were also driven by the $319 million increase in Air traffic liability, as a result of seasonal bookings for future travel, and the $442 million in net income. See Item 3, and Notes 5 and 8 to the unaudited condensed consolidated financial statements. Net cash provided by operating activities is primarily used to finance capital expenditures.


Net cash flows used in investing activities during the nine months ended September 30, 2006, totaled $1.1 billion compared to $876 million in 2005. Investing activities in both years consisted primarily of payments for new 737-700 aircraft delivered to the Company and progress payments for future aircraft deliveries. In addition, investing activities for both periods was impacted by changes in the balance of the Company’s short-term investments, namely auction rate securities. During the nine months ended September 30, 2006 and 2005, the Company’s short-term investments increased by $103 million and decreased by $72 million, respectively.


Net cash used in financing activities during the nine months ended September 30, 2006, was $468 million compared to $169 million generated from financing activities for the same period in 2005. During the nine months ended September 30, 2006, the Company repurchased $600 million of its Common Stock and redeemed $137 million of its debt on scheduled maturity dates. These outflows were partially offset by $226 million received from the exercise of Employee stock options. In the prior year, the Company generated $300 million from the February 2005 issuance of senior unsecured Notes due 2017. This was partially offset by cash used to redeem $100 million senior unsecured 8% Notes, $36 million used to repay other long-term and capital lease obligations, and to repurchase $55 million of the Company’s Common Stock.

 

[SWA/FO]

I knew it was just a matter of time before the real world catches up with Southwest. There will be challenges ahead for them in all areas. Sometimes a reality check is so poetic. Good luck and welcome to the real world that all of the rest of us have to wake up to every day.

Just because you didn't make the cut, doesn't mean we are going to fail in our quest for World dominance.

 

[Bubba Dog]

Just because you didn't make the cut, doesn't mean we are going to fail in our quest for World dominance.

Let's just say for argumentative sake that I did make the cut,it still would not have changed my mind about the challenges that still lay ahead for Southwest. I really hope that you guys are able to hang to everything you can because that would bode well for the entire national pilot group. But I think the handwriting is on the wall. Good luck.

 

[SWAdude]

But I think the handwriting is on the wall. Good luck.

What handwriting are you looking at?

Compared to the same quarter last year:

1) Growth at 8%

2) Revenues up 16%..think about this one for a moment.

3) Unit costs minus fuel expense lower.

I hate to simplifiy the situation but I can't see the problem here.

Its a one time charge that our management elected to write off all at once during this last quarter. By no means does it reflect on the health of SWA.

 

[Tejas-Jet]

Let's not forget Wolfe, the man was a genius, he made millions off the backs of the ual employees

I really think his name was spelled ....Wolf....like the animal....no "e" at the end....

Where is that guy now, anyway?

Tejas

 

[SWA/FO]

I doubt you made the cut at SWA ... maybe FDX but not here. Nobody talks with such doom and gloom here.

 

[FlyBoeingJets]

I think the handwriting is on the wall.

How about--

That's how the cookie crumbles

A stitch in time saves nine

A penny saved is a penny earned

It can happen to anyone

Wait for your turn in the barrel

The sky is falling




Nothing against you Bubba. But Flightinfo seems to be a haven for catch phrases without info to back them up.

 

[chris69]

The Balance Sheet - No spin:
First 9 months, in millions:
Operating Rev: $6,810
Operating Exp: $6,050
Operating Income: $760 (up 30% from 05)
Other Exp: $71
Income B4 Taxes: $689
Income Taxes: $247
Net Income: $442
Net Cash provided by operating activities: $1,263
Cash and Equiv: $1,947 (after the capital purchases and stock buyback - below)
Purchases: $1,128 (Airplanes (30 so far this year) and equip)
Repurchase of stock: $600

Total Liabilities: $3,944 (Only $1,275 of which is long term debt)
Market Cap: $14,087

Barron's points out that SWA has the best balance sheet in the industry and only one which looks like any other non airline Fortune 500 company.
Sure looks like impending bankruptcy to me.

 

[YourPilotFriend]

If I buy into your assumptions, I still can't come up with 2009 as a BK year for SWA.

It took much longer for Delta and NWA to go into BK after 9/11. They were both in trouble earlier in 2001 but didn't go into BK until 2005. I would start the clock the year SWA starts posting losses. Then I would assume at least 3-5 years until BK.

I simply making a prediction on what I believe is going to happen. 2007 is proabaly going to be a very bad year for non-corporate travel, maybe the worst in many years. Next year home loans across the US need refinancing from the arm loans. NWA's domestic operation lost billions, the reason the company didn't fold is because losses were offset by international travel and cargo.

Also SWA profits have continued to slide over the years relative to their unit size. In other words they had less airplanes and made more money per airplane then they do now; furthermore, they continue to increase capacity. If this trend continues and the economy dips a little bit, which it is predicted to do, SWA may fall below profitable capacity. At that point for SWA to make the necessary changes to the model that will return them profitabilty, they will have to enter bankruptcy protection. However, they could resturture outside of bankruptcy and run the risks associated with that. Although, the best move at that point may be to merge with another airline. Preferably another LCC, which, most of legacies are already.

 

[FlyBoeingJets]

I doubt you made the cut at SWA ...

You're spending too much time at your favorite website. Has the name change to Chuck Norris gone thru yet?

www.chucknorrisfacts.com