Southwest's earnings take off

[FA Mikey]

Southwest Airlines Co., the leading U.S. discount carrier, said Thursday it posted higher first-quarter earnings but that its jet fuel hedges are gradually unwinding.

Net profit for the largest U.S. airline by market value rose to $93 million, or 12 cents per share, from $61 million, or 4 cents per share, in the same period last year.

However, economic net income fell 48 percent to $33 million, or 4 cents per share, from $64 million, or 8 cents per share, a year earlier.

story here

 

[chucky]

Southwest Airlines Co., the leading U.S. discount carrier, said Thursday it posted higher first-quarter earnings but that its jet fuel hedges are gradually unwinding.

Net profit for the largest U.S. airline by market value rose to $93 million, or 12 cents per share, from $61 million, or 4 cents per share, in the same period last year.

However, economic net income fell 48 percent to $33 million, or 4 cents per share, from $64 million, or 8 cents per share, a year earlier.

story here

Southwest (Charts, Fortune 500) shares rose sharply on Wednesday after Roger King, an airline analyst with CreditSights, said in a report that a $15 billion Southwest leveraged buyout was a "no-brainer."
But Kelly said such a deal did not seem reasonable.
"I don't think it makes any sense to leverage $9 billion of additional debt on an airline like Southwest," he said in an interview on the CNBC financial news channel.
"(A buyout) would have to be done in a way that it preserves the special and unique culture that we have at Southwest Airlines, and I doubt that it could," he said.



Interesting. First time I've ever heard buyout mentioned in a Southwest article. Farfetched? Could the next wave of consolidation involve low fare/cost carriers? Hmmmm...

 

[sfb]

Interesting. First time I've ever heard buyout mentioned in a Southwest article. Farfetched? Could the next wave of consolidation involve low fare/cost carriers? Hmmmm...

Well, the talk of a buyout of Southwest has very little to do with industry consolidation. Rather, it has to do with the fact that Southwest has very little leverage -- little debt when compared to the rest of the industry and a large fleet of mostly company-owned, unencumbered aircraft. The company is sitting on over $13 billion in assets with a bit over $4 billion in debt. What would happen in a leveraged buyout, which is the subject of speculation, is that a buyer or buyers would mortgage the substantial majority of Southwest's assets and use part of the company's cash to fund most of the purchase price paid for the company.

The essential problem with an LBO of Southwest is that the company is so very dependent for its success on its culture and employee morale (or as Herb likes to put it, esprit de corps). A hostile takeover would likely destroy the collegial employee-management relationship and lead to a long downward spiral for the company.

 

[WNjetdoc]

I know its only a rumor, and won't happen, but we've heard from at least 3 aircrews of a SWA buyout of Airtran. Farfetched, yes, but so is this LBO.

Southwest (Charts, Fortune 500) shares rose sharply on Wednesday after Roger King, an airline analyst with CreditSights, said in a report that a $15 billion Southwest leveraged buyout was a "no-brainer."
But Kelly said such a deal did not seem reasonable.
"I don't think it makes any sense to leverage $9 billion of additional debt on an airline like Southwest," he said in an interview on the CNBC financial news channel.
"(A buyout) would have to be done in a way that it preserves the special and unique culture that we have at Southwest Airlines, and I doubt that it could," he said.
Interesting. First time I've ever heard buyout mentioned in a Southwest article. Farfetched? Could the next wave of consolidation involve low fare/cost carriers? Hmmmm...

 

[ramper_in_las]

I know its only a rumor, and won't happen, but we've heard from at least 3 aircrews of a SWA buyout of Airtran. Farfetched, yes, but so is this LBO.

I would think that ATA would fall in line first with all the talk about HNL flights and with European LCC RyneAir talking about discounting flights from London to NYC and WN already saying that it would consider that market...

 

[NewHampshire Black Bears]

Well, ANYTHING is possible in this "Lunatic Asylum" Industry.

But its NO secreat, that WN(with a stock price of almost DAILY, of $15), is a potential STEAL(as they say in lower Manhatten.

NH/BB's