Southwest Plans to Expand

[mrman]

Southwest traditionally makes big expansion moves in "bad times". Highlights from Austin American-Statesman today:

*CEO Gary Kelly said the Dallas-based airline made a series of investments that have 'locked in' about 73 percent of its fuel costs at a price equivalent to $51 a barrel for oil, or far less than half the current market price. Next year, the airline has about 60 percent of its fuel cost locked in at the same price. The market price for oil Thursday was $136.74 a barrel.

*Kelly, who was in Austin on Thursday, told the American-Statesman that his company plans to add 13 new planes this year and 14 next, and add routes to build traffic while much of the rest of the industry is cutting back. 'We are expecting to take more market share.

*Fuel-price hedging, Kelly said, is just an insurance policy. 'We don't know what fuel prices are going to be. It is not that we are so good at guessing,' he said. It is just that you can't be unprepared. We think that it is just prudent risk management to have that protection in place.

*But Kelly said Southwest has no plans to create special charges for services such as checking luggage, serving snacks or making phone reservations, as some airlines have done to build revenue. That 'no surprises' policy, he said, should bolster customer satisfaction levels, which Kelly said are the highest in the industry

*Southwest, which carries more passengers than any other American airline, made a profit of $43 million on record first-quarter revenue of $2.53 billion, ending March 31.

 

[robbedagain]

this all at the expense of the inept mgmt of USairways

 

[mrman]

Pittsburgh Post-Gazette - Online

Highlights:

*With fuel prices skyrocketing and carriers slashing flights and raising fees, it might be next to insane to try to persuade an airline to expand in Pittsburgh or anywhere else at this time. But that's exactly what Allegheny County Chief Executive Dan Onorato will be doing today, when he travels to Dallas to meet with Southwest Airlines and its chief executive officer, Gary Kelly.

*Accompanied by Allegheny County Airport Authority Executive Director Bradley D. Penrod and board Chairman Glenn Mahone, Mr. Onorato said he would make a pitch to Southwest to become a 'major player' in Pittsburgh, where it now is the second-largest carrier with nearly 17 percent of all traffic.

*One factor working in Pittsburgh's favor, he said, is that its origin and destination traffic -- local travelers who start and end their trips here -- has soared from 6.2 million passengers two years ago to 8.2 million this year. Such growth may be appealing to low-cost carriers.

*While prospects for more expansion may be dim right now, Southwest has been pleased with traveler response in Pittsburgh, Ms. Eichinger said.

 

[whlinder]

I'm kind of surprised they want to expand. Reallocate existing capacity, certainly, especially away from leisure markets that are likely to see traffic drop a little more compared to the rest of the country (PHX, LAS, Florida) and move it into more business markets.

 

[whatkindoffreshhell]

Years ago Ray Kroc (founder of McDonalds) was asked what he would do if he came across a competitor who was drowning.

"Stick a running garden hose in his mouth" replied Mr. Kroc.

WN sticks to the plan. No desperate cries for 'consolidation' or 'employee sacrifice'

Sure, they are only profitable now ($43mil on $2.4bil of revenue is hardly a great profit but is profit nonetheless) because of fuel hedges. Good for them! Wise planning and use of their size. Certainly the latter reason is an advantage of AA,UA,DL,NW etc too. Where were their bean-counters?

 

[Borescope]

Sure, they are only profitable now ($43mil on $2.4bil of revenue is hardly a great profit but is profit nonetheless) because of fuel hedges.

They turned the profit from a 300+ profit on fuel hedges. Had it not been for these WN would join have joined the rest of the industry. IOAMOT

 

[whatkindoffreshhell]

They turned the profit from a 300+ profit on fuel hedges. Had it not been for these WN would join have joined the rest of the industry. IOAMOT

And other large carriers have never turned a profit only because they can benefit from their size and strength??

What if AA had to purchase fuel at the same rate as Skybus?

Or if DL had to buy overhaul services at the same rate as AirTran?

When you have a competitive advantage (in any industry) you use it.

Profits are profits. Real money. Not creative accounting.

 

[mrman]

Stolen from FT:

Hang on to your 737s Ladies, the ride is about to get interesting.

http://www.bloomberg.com/apps/news?p...bMU&refer=news

excerpt:

The largest low-fare airline may keep as many as 10 older planes set to be retired in 2008 and then add 14 new jets in 2009, Kelly said. As United Airlines and others prepare to pare flying in the fourth quarter, Southwest has delayed deciding on next year's expansion, he said, without giving a time frame.

``We're all curious to see what the effects of the cutbacks in the fourth quarter will be,'' Kelly said yesterday in an interview. ``We're willing to grow the fleet, and that's very different than what's going on with most of our competitors.''

 

[Borescope]

When you have a competitive advantage (in any industry) you use it.

Exactly.....As I said IOAMOT, use it while you can.