SWA profits off 77%

[YourPilotFriend]

For a Ph.D. of airplanes, your reasoning escapes me.

It's also about public perception, since most people believe SWA is still cheaper. Also SWA has a major advertising campaign that other airlines do not. Furthermore, SWA has raised fares a few times over the past years and has seen capacity increases.

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. This is based off the reasioning that when legacy carriers regained pricing power over the LCC's, the industry would spin out of control. Since deregulation, even though the graph has it's ups and downs, the general trend has been major fare decline. The difference now between major profit and major losses is as slim as 50 cents on a fare. It's much easier to cut fares and lose money then it is to keep fares at the same level and fall below break even capacity. In other words if SWA fuel hedges required a fare increase of $10 and the other airlines resisted, They would have to cut out that $10 and go into the red, and face a slow death like the other airlines have gone through. IF they keep the fare raise, and fall below break even capacity, it will take less than 6 months before the airline blows through its $3 billion in cash.

Now we are facing the further squeeze of the middle class in 2007 when arm loans are due as well as the manufacturing companies are going to increase unemployment across the US. 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.

 

[DH2WN]

Well, let me be first to say ******************** off.:smash:

Second, it's negotiating time, so guess what everybody, Gary is gonna expense everything he can to write down even more debt, all the while making it look like doom and gloom. Please, we missed projection by 1 cent. You all need to be over on the other thread congratulating Continental, good job there.

For SWA, it's all a game of smoke and mirrors till a contract is signed, hang on for the ride.

Please tell me you are NOT on the NC committee. I have never read a more ridiculous post ever.

 

[Bubba Dog]

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.

 

[Irishav8r]

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.

No offense but I've been fuloughed and dealt with a bankruptcy. Maybe it would be prudent to realize that this might be the last job for many, but it certainly hasn't been the first. I'll gladly take my chances here if you don't mind? Have a nice day....

 

[StopNTSing]

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.

Yet another reminder of the old adage "Misery loves company"

 

[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.