Parker says fuel bill to rise by $2B

[N965VJ]

US Airways CEO says fuel bill to rise by $2B
Wednesday June 11, 1:58 pm ET

US Airways CEO says the airline will pay $2 billion more for fuel in 2008

TEMPE, Ariz. (AP) -- US Airways chief Doug Parker says fuel costs per passenger have doubled since 2007, and the carrier will pay nearly $2 billion more in fuel in 2008.

Parker told shareholders Wednesday that it's a "severe time" for the entire industry.

He pointed out that the Tempe, Ariz.-based airline will try to recoup some of those costs with its recently announced fees for a second bag, choice seating and other service charges.

Link to the rest

 

[28yrsnojob]

Its time for him to ask for pay cuts to save the airline. Maybe 6 to 9 months until prices
be stable again. Also close down all route that are not producing a yeild.

 

[N965VJ]

Okay, FAs, all you have to do is sell one billion cans of $2 soda pop and the fuel problem goes away.

Get crackin’!

 

[flybynite]

I seem to recall Kirby stating in one of our recent crew news videos that some of our hedges are at $120 a barrel.

And that Southwest is hedged at something like $70 a barrel through the end of the year. Maybe I heard wrong.

 

[flybynite]

Correction...Southwest is hedged at $51 a barrel 'til the end of the year.

 

[FWAAA]

I call Bull Feces!

If 40% of the fuel requirements are hedged at 70 to 80 dollars a barrel then how does he get to 2 Billion?

You can tell they're lieing their lips are moving, the open question is how.

Here's the fuel hedging as of 3/31/08, as discussed on page 40 of the first quarter 10-Q:

Commodity price risk

As of March 31, 2008, we have entered into costless collars to protect ourself from fuel price risks, which establish an upper and lower limit on heating oil futures prices. These transactions are in place with respect to approximately 31% of our remaining projected mainline and Express 2008 fuel requirements at a weighted average collar range of $2.29 to $2.49 per gallon of heating oil or $75.22 to $83.62 per barrel of estimated crude oil equivalent and 2% of our projected mainline and Express 2009 fuel requirements at a weighted average collar range of $2.60 to $2.80 per gallon of heating oil or $86.47 to $94.87 per barrel of estimated crude oil equivalent.

The use of such hedging transactions in our fuel hedging program could result in us not fully benefiting from certain declines in heating oil futures prices. Further, these instruments do not provide protection from the increases unless heating oil prices exceed the call option price of the costless collar. Although heating oil prices are generally highly correlated with those of jet fuel, the prices of jet fuel may change more or less then heating oil, resulting in a change in fuel expense that is not perfectly offset by the hedge transactions. At March 31, 2008, we estimate that a 10% increase in heating oil futures prices would increase the fair value of the hedge transactions by approximately $103 million. We estimate that a 10% decrease in heating oil futures prices would decrease the fair value of the hedge transactions by approximately $99 million.

http://phx.corporate-ir.net/phoenix.zhtml?...hdHRhY2g9T04%3d

Jet fuel is now over $4/gal - dunno whether Dugweiser is lying about the aggregate fuel price increases facing USAir.

In 2007, US spent $2.7 billion on fuel (net of hedging gains), so now Dug is saying US will spend perhaps $4.7 billion in 2008. Anything's possible.

 

[olivia]

About three to four weeks ago ...the figure they put out ..was one billion more in fuel this year.

So the numbers seem a bit fuzzy to me.


If I were Tempe....I would start cutting service in those WN markets where fares are still only 79-200 for tickets out of PHX to various spots like LAX, LAS, SAN.

Maybe you cannot cut all the flights but some of those flights are just not running full every day....and are not paying their way. Some of those routes haven't made any money since
the merger. The East coast is getting slammed with high fares and it is just not fair
for our East coast passengers to have to pay for the West Coast operation.

There are 1000.00 air fares in some markets in the east for a flight less than two hours.

I hope they act quickly....I would not think the investors want to see the 3billion surplus to disappear in a year.

 

[FWAAA]

About three to four weeks ago ...the figure they put out ..was one billion more in fuel this year.

So the numbers seem a bit fuzzy to me.

And oil is up a lot since then. Jet fuel is gonna hit $4.50/gal unless oil backs off.

I hope they act quickly....I would not think the investors want to see the 3billion surplus to disappear in a year.

US has no "$3 billion surplus." As of 3/31/08, US had only $2.3 billion of unrestricted cash, and included in that figure is the $300 million of non-marketable Auction Rate Securities (having a face value of over $400 million). And so far, US has found no buyers for those assets.

Accordingly, on 3/31, US had but $2.0 billion of spendable/marketable cash, and IIRC, US has to have at least $500 or $750 million of unrestricted cash to avoid default on its debts. US has very little breathing room and will likely file a petition for protection from creditors within 4 months.

Game over. Checkmate.