SWA raises fares!

[Dizel8]

NEW YORK (Reuters) - Southwest Airlines Co. raised its air fares by up to $10 for a one-way ticket, seeking to offset $600 million in estimated additional fuel costs this year, a spokesman said on Monday.

Other airlines matched the raise


http://news.yahoo.com/s/nm/20060313/bs_nm/airlines_southwest_dc

 

[FlyBarneyJets]

Other big airlines, including Continental Airlines Inc., Northwest Airlines Corp., US Air Group Inc., Delta Air Lines Inc., AMR Corp.'s American Airlines, and UAL Corp.'s United Airlines followed Southwest's fare hike, which occurred late on Friday.

Good! Not to sound like I'm screaming "Southwest To The Rescue!" but it's about time the passengers were passed an increase in the cost of all airlines doing business. This is good for every airline, and it's about time.

 

[JetDude]

I'm trying to understand what the big deal is. If I recall correctly, SWA raised fares 5 times last year.

 

[kelbill]

Come on, we're not crazy. We want to remain the low cost king, but when oil stays at a certain level, those low costs creep up and must be met by revenue. And we have raised fares more than a few times over the last year and a half.

 

[flatspin7]

This is the only industry that hasnt gotten the message--- when costs go up so must prices.

The rest of the US economy has figured that out except the airlines... its about damn time that lower end of the price spectrum (SWA/Jetblue) raise price which will allow the Legacy Carriers to inturn raise prices... thats good for everybody.

(just a note --- I didnt type Dang--- it changed it from DAM very dissapointing)

 

[IXLR8]

http://biz.yahoo.com/bizj/060313/1258926.html?.v=1 NWA matched..along with the others...

 

[Bavarian Chef]

Check out the article on the thread I posted about this same subject -- jb was the only airline NOT to raise fares. Who are the ad wizards running our company?

 

[FlyBarneyJets]

This is the only industry that hasnt gotten the message--- when costs go up so must prices.

The rest of the US economy has figured that out except the airlines... its about dang time that lower end of the price spectrum (SWA/Jetblue) raise price which will allow the Legacy Carriers to inturn raise prices... thats good for everybody.

(just a note --- I didnt type Dang--- it changed it from DAM very dissapointing)

I think the industry completely understands the concept. It's the passengers that don't. If the flying public can't get a "deal" (beit on Southwest or through one of those blasted internet sites like hotwire or expedia), they don't travel. The travelling public needs to get the message.

 

[PurpleTail]

Come on, we're not crazy. We want to remain the low cost king, but when oil stays at a certain level, those low costs creep up and must be met by revenue. And we have raised fares more than a few times over the last year and a half.

It is NOT the fact that costs are creeping up, costs (oil) have jumped up! The difference though at SWA is that their fuel hedging allowed them to keep ticket prices low and undercut everyone else. And even though SWA has hedged their fuel until 2009 the percent hedged does decrease as time goes by. Hence the $10 fare increase to cover fuel costs that were once hedged and no longer are.

The fact is SWA has captured a certain market share now and people will willing pay the increase because SWA knows how to have fun and appreciate their customers, IMHO.

 

[pipejockey]

This is the only industry that hasnt gotten the message--- when costs go up so must prices.

The rest of the US economy has figured that out except the airlines... its about dang time that lower end of the price spectrum (SWA/Jetblue) raise price which will allow the Legacy Carriers to inturn raise prices... thats good for everybody.

(just a note --- I didnt type Dang--- it changed it from DAM very dissapointing)

Why should the airlines raise prices when they can just demand concessions instead to make up for the fuel increases. It's been going on for 4.5 years unabated. All management has to do is say boo and labor races to take a pay cut.

 

[Gregorio]

I think the industry completely understands the concept. It's the passengers that don't. If the flying public can't get a "deal" (beit on Southwest or through one of those blasted internet sites like hotwire or expedia), they don't travel. The travelling public needs to get the message.

Geez, that capitalism thing just isn't getting through to you, is it?

The traveling public doesn't need to get any message. They decide who and where they want to fly and search for the best price. No airline is doing them a favor by offering them a ride, they pay the bills. If the bill gets too high, they quit flying. PASSENGERS PAY YOUR SALARY!!! It is not your place to teach them anything. This sanctimonious attitude that the flying public somehow needs "educating" is childish and stupid. Try telling it to the unemployment office or your union rep.

 

[Andy]

Good for Southwest. They are in the catbird seat as far as controlling ticket prices due to their shrewd hedging strategy. I'm glad to see that just about everyone matched the increase. This industry needs to pass those costs on to consumers.
I'm surprised that JetBlue didn't match, especially after Neeleman said that they would have been break even if they had an additional $10 per ticket. Their load factors are already about as high as they can get (near mid-80s), how much traffic do they think they'd lose by matching the fare increase? Dumb.

 

[IXLR8]

I'm surprised that JetBlue didn't match, especially after Neeleman said that they would have been break even if they had an additional $10 per ticket.

I'm not...there always seems to be one that doesnt follow..then, it seems the rest have to give up the increase...

 

[SWA/FO]

Good for Southwest. They are in the catbird seat as far as controlling ticket prices due to their shrewd hedging strategy

I said something like that months back and everybody yelled at me and called me names. They made me feel bad. :crying:

 

[Deacon]

Good! Not to sound like I'm screaming "Southwest To The Rescue!" but it's about time the passengers were passed an increase in the cost of all airlines doing business. This is good for every airline, and it's about time.

AS long as others match.......remember the last few years NWA has shot down over 10 fare increase attempts by others.......their strategy was to put UAL out of biz ....well you know how it has all ended up

It look like most have matched so that is good news

 

[Andy]

I said something like that months back and everybody yelled at me and called me names. They made me feel bad. :crying:

Wasn't me. As you know, Satan's playing ice hockey when we agree. He's wearing skates this morning. :beer:

 

[FlyBarneyJets]

Geez, that capitalism thing just isn't getting through to you, is it?

The traveling public doesn't need to get any message. They decide who and where they want to fly and search for the best price. No airline is doing them a favor by offering them a ride, they pay the bills. If the bill gets too high, they quit flying. PASSENGERS PAY YOUR SALARY!!! It is not your place to teach them anything. This sanctimonious attitude that the flying public somehow needs "educating" is childish and stupid. Try telling it to the unemployment office or your union rep.

Easy there, Speed Racer.

What I was simply trying to say is that people in this country have seen increases in pricing by other businesses related to fuel costs. UPS and FedEx, for instance, have increased their shipping pricing because it costs them more to move everyone's boxes. Sanitation costs in the city of LA have gone up because of the increase in the price of gas for the city's garbage trucks. The average consumer has no issue with this. Yet when they see that airfare is going up, all hell breaks loose. The people see the correlation between increase fuel costs in other industries, but not in the airlines.

Capitalism is a two-way street.

 

[YourPilotFriend]

Geez, that capitalism thing just isn't getting through to you, is it?

The traveling public doesn't need to get any message. They decide who and where they want to fly and search for the best price. No airline is doing them a favor by offering them a ride, they pay the bills. If the bill gets too high, they quit flying. PASSENGERS PAY YOUR SALARY!!! It is not your place to teach them anything. This sanctimonious attitude that the flying public somehow needs "educating" is childish and stupid. Try telling it to the unemployment office or your union rep.

I dont know how true that is, since passengers search for the lowest fare for the trip they want to go on, even if the airfare is too high, they still fly. Market rates are based on what the lowest cost airline can fly for, "Walmart effect". If the consumers don't get the message, the lowest cost service company can force out the competition. It's that competition that keeps fares low. SWA would not be charging "Fun Fares" if they were the only airline. The general public is killing the middle class. By searching for the absolute lowest price, they are redustributing wealth inappropriately. In other words, you wouldn't be forced to shop at walmart if other consumers didn't shop at walmart.

 

[Tejas-Jet]

All management has to do is say boo and labor races to take a pay cut.

And....who's fault is that? Have those union reps been voted out or recalled from their positions?

Tejas

 

[DH2WN]

I hope this is a reminder to those vocal SWA pilots who think we are making money without a hedge. You are wrong. Those vocal SWAPA board pilots who want to bleed the company dry with the upcoming negotiations.

My advise to you is shut up and count your blessings. We can't make money without the hedge and better just suck it up and enjoy what we have now.

 

[SWAdude]

I hope this is a reminder to those vocal SWA pilots who think we are making money without a hedge. You are wrong. Those vocal SWAPA board pilots who want to bleed the company dry with the upcoming negotiations..

What on earth on you talking about?? There has been ZERO talk about this.

My advise to you is shut up and count your blessings. We can't make money without the hedge and better just suck it up and enjoy what we have now.

Wrong Kernal. We would have netted a profit last year without the hedges.

Plenty of old threads to support this.

 

[Falcon Jet 1]

I hope this is a reminder to those vocal SWA pilots who think we are making money without a hedge. You are wrong. Those vocal SWAPA board pilots who want to bleed the company dry with the upcoming negotiations.

My advise to you is shut up and count your blessings. We can't make money without the hedge and better just suck it up and enjoy what we have now.

You are wrong.Unless you know more than Gk who said we would have made money without the hedges. I hope that this pilot group doesnt accept anything less than COLA, because that is a paycut. just because the rest of the industry is taking cuts and we are highest paid PER HOUR by default, you still have to look at pilot casm which is still lower than everyone else due to productivity. Another reason not to hire the Kolonels ffrom the luke mafia, beacause they can only be told what to do , and not think outside the box. Thus the reason why our FOM is 15 inches thick and tells you when you can take a Sh--t, due to the fact we hire weak d--k pilots sometimes and not aviators that can think.

 

[Andy]

Wrong Kernal. We would have netted a profit last year without the hedges.

Plenty of old threads to support this.

So now you're eating your own.

The article says that the cost will offset an additional $600 million increase in fuel costs this year vs last year. Southwest is still hedged this year.
Net profit last year was $548 million (76 + 159 + 227 + 86).

You can do amazing tricks with GAAP accounting standards but 600 is still greater than 548.

 

[SWAdude]

So now you're eating your own..

Your weird. I don't even know if this guy works for us. If he does, then he's a probationary pilot with quite the attitude. Why do you find it wrong to disagree with someone from your own airline?? Sounds like a dictatorship to me.

The article says that the cost will offset an additional $600 million increase in fuel costs this year vs last year. Southwest is still hedged this year.
Net profit last year was $548 million (76 + 159 + 227 + 86)..

Our CEO said we would have made a profit last year without the hedges. Believe what you want. There have been plenty of threads on this already. So many look at this problem with a straight line. There are corporate tax and profit sharing implications that make you completely wrong on this one.

You can do amazing tricks with GAAP accounting standards but 600 is still greater than 548.

No tricks needed. Why would our CEO say otherwise?? I'm sure you have another subjective incorrect theory to make yourself feel better.

 

[TAZ MAN]

The article says that the cost will offset an additional $600 million increase in fuel costs this year vs last year. Southwest is still hedged this year.
Net profit last year was $548 million (76 + 159 + 227 + 86).

You can do amazing tricks with GAAP accounting standards but 600 is still greater than 548.

Andy,

Read this thread and this might explain where your incorrect.

http://forums.flightinfo.com/showthread.php?t=57945&page=2

 

[Andy]

Your weird. I don't even know if this guy works for us. If he does, then he's a probationary pilot with quite the attitude.

Let's see. He uses 'we.' His name is DH2WN ... indicates that he left ACA/FLYi to go to Southwest. It sure was hard to figure that one out.

 

[Andy]

Andy,

Read this thread and this might explain where your incorrect.

http://forums.flightinfo.com/showthread.php?t=57945&page=2

Great point on the pretax/posttax thing, although you can't directly go from Operating income - taxes to get net income.
For 2005, Southwest's income before taxes was $874 mil (114 + 256 + 368 + 136), including the $104 mil gain in Q3 (looks like a one time credit; I haven't plowed through the 10-K to confirm).
Even backing out the $104 mil gain, you'd be looking at $770 mil before taxes. Fairly nice balance sheet at first glance; it doesn't look like the accountants played a lot of games with the numbers.

What's Southwest's fuel hedges for 2006 and beyond (%age, avg price)?

 

[TAZ MAN]

Let's see. He uses 'we.' His name is DH2WN ... indicates that he left ACA/FLYi to go to Southwest. It sure was hard to figure that one out.

Andy,

Your a bit on the naive side. A little angry also.

Best of luck getting recalled as soon as possible.

 

[TAZ MAN]

Great point on the pretax/posttax thing, although you can't directly go from Operating income - taxes to get net income.
For 2005, Southwest's income before taxes was $874 mil (114 + 256 + 368 + 136), including the $104 mil gain in Q3 (looks like a one time credit; I haven't plowed through the 10-K to confirm).
Even backing out the $104 mil gain, you'd be looking at $770 mil before taxes. Fairly nice balance sheet at first glance; it doesn't look like the accountants played a lot of games with the numbers.

The point is they would have made money without the hedges.

Why can't you grasp this simple fact?

And for that matter, why all the negativity towards SWA??

What's Southwest's fuel hedges for 2006 and beyond (%age, avg price)?What's Southwest's fuel hedges for 2006 and beyond (%age, avg price)?

Way too many threads on this also. But to sum it up...they eventually go to zero. You are trying real hard to find where SWA is going to start struggling like UAL.

 

[FlyBoeingJets]

Great point on the pretax/posttax thing, although you can't directly go from Operating income - taxes to get net income.
For 2005, Southwest's income before taxes was $874 mil (114 + 256 + 368 + 136), including the $104 mil gain in Q3 (looks like a one time credit; I haven't plowed through the 10-K to confirm).
Even backing out the $104 mil gain, you'd be looking at $770 mil before taxes. Fairly nice balance sheet at first glance; it doesn't look like the accountants played a lot of games with the numbers.

What's Southwest's fuel hedges for 2006 and beyond (%age, avg price)?

How much does SWA need to adjust for less hedging? It depends on whether you quote current fleet size, estimated average fleet size, or fleet size at the end of the year. With 33 airplanes coming in '06 these assumptions vary quite a bit. You also have to deal with assumptions on selling fuel/oil contracts, futures, hedges or whatever they are calling them. They vary in price almost daily and the company sells a portion of them every once in awhile. You can't estimate with certainty their combined value at the end of the year.