USA320Pilot
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- May 18, 2003
- 8,175
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Airlines get bruised by fuel-price bets
- Thread starter USA320Pilot
- Start date
Phoenix
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- Apr 16, 2003
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I don't buy aviation fuel but if auto gas prices are any indication... Last year the "experts" projected $6 gas by the end of last summer and gas has been going down most of the year. Seems to me if your fuel hedge wasn't shorting fuel then you lost money.
Its probably USAPA's fault. I mean Bush's fault.
Its probably USAPA's fault. I mean Bush's fault.
CallawayGolf
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- Nov 13, 2009
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The media sure treats WN with kids gloves..."going so far as to push Southwest Airlines Co. toward a loss". So did they just get pushed "towards" a loss or did they actually report a loss? Rhetorical question as I already know they reported a $140 million loss for the quarter. For any other airline they would just say "XYZ airline lost $140 million due to a fuel hedging shortfall". Not to worry, though, WN is predicting a $300 million benefit from hedging in the fourth quarter (even though we are only 20 days into the quarter at this point).
It should be interesting to see what US reports next week with the no-hedge strategy.
It should be interesting to see what US reports next week with the no-hedge strategy.
Iclubbabyseals
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- Jul 22, 2011
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- #5
You know, if you would look back at the performance over the last fifteen years, LUV well outperforms any other carrier. The fact that they "had a loss" is likely inconsequential in the timeline.
It is like people barking about soylenda, implying corruption, etc. When I point out that that particular investment represents less than 1 percent of the total and remind the usual weak minds that I would chortle and sing praises if my resume included only less than a 1% loss, they crap. As they should.
LUV will devour PHX, as they should. Maybe LUV can make PHX work without all the subsidies from the east.
In all fairness, the Southwest loss last quarter was simply a reduction in the value of the contracts, no cash was lost. That said, they were able to claim profits in the past simply due to the value of contracts raising in value, while actually losing money in the same quarter.
Looks like management bet correctly by not betting at all.
Looks like management bet correctly by not betting at all.
BoeingBoy
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- Nov 9, 2003
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Actually, some cash was paid out but it was minor compared to the mark to market loss on unsettled hedges - $36 million in premium costs on unsettled hedge positions. Basically, if the market value of a hedge decreases relative to the "face value", there is a "mark to market" accounting charge (no cash involved) and the counter-party to the hedge wants a higher premium to keep the hedge in place.
Jim
SparrowHawk
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- Nov 30, 2009
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Any published predictions on Q3 results? YTD Results?
BoeingBoy
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- Nov 9, 2003
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- #9
First call's consensus is for 49 cent/share as of this morning, or about $80 million in profit before special items. I don't think anyone does YTD estimates, but that should result in a profit YTD - without looking it up I think US was showing a 1st half loss of $10-$15 million. For a $12+ billion a year company, effectively break-even.
Jim
Jim
HPearlyretiree
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- Nov 6, 2002
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That horrible, evil management, making a profit, how dare they!!!! Smart move on hedging. But, the media ass kissing of SW will continue.
28L_or_10R?
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- Apr 11, 2008
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As per yahoo finance, an average estimate of a $.23/share profit for the year. If loads and revenue stay their present course, I believe we may surprise to the upside.
SparrowHawk
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- Nov 30, 2009
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Profit is not evil or even remotely bad, in fact the more of it there is the better chance of more money for employees. What a lot of folks resent that you see as evil is that US Airways has been an above average performer post merger profit wise. However they have NEVER been above average pay wise and that inconsistency is what get's people annoyed.
Companies are certainly free to pay as they choose. Employees are free to join unions in order to seek a better deal. While much of what happens at US is market driven and not in anyone's direct control. While all of this is true it doesn't mean we have to like it.
As to WN getting their ass kissed by the media:
Is that really the case? Or through superior performance over time and the use of PR Professionals have they earned the right to be treated with kid gloves?
When you compare US's performance to that of WN on any front, US is found to be lacking in every regard.
CallawayGolf
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- Nov 13, 2009
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You mean except for WN:
* Received the largest fine from FAA for failed maintenance practices and falsifying records
* Has had several holes ripped in multiple aircraft while in flight (fuselage fatigue)
* Doesn't offer first class service
* Doesn't offer international service
* Doesn't have reserved seating
* Doesn't offer bookings through major online travel sites
* Forces passengers not traveling with luggage to subsidize those that bring 1-2 bags with a bundled ticket price
SparrowHawk
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- Nov 30, 2009
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Well when you spend the kind of millions on media advertising you buy yourself a free ride when bad news does hit. As to the last five items they're all total bull feces. WN has a business plan that from day one said "That's not who we are, accept it or reject it". Clearly they have found acceptance and success in the marketplace, Media & Wall Street.
As to the fines, I'm guessing you've moved out of the glass house regarding HP's history of a rocky relationship with the FAA. Fines, near grounding of the ENTIRE Fleet. When it comes to being a bigger drinker even there Herb Kelleher kicks old DP's assets AND managed not to get locked up. WN has a business model that generates sustained profits without gimmicks. US doesn't, Game, Set, Match to WN
