Luv Fades

[hobbes]

You continue to amaze me with your flawed logic and subjective crap.

Bottom line #1 - UAL spent that money into Defined Contribution plans that are part of regular employee compensation. AMR spent it into their defined benefit plans. Just because they were booked differently in the quarterly results doesn't make a difference. UAL was much more profitable in the 3rd quarter than AMR.

Going forward AMR will continue to have that burden. You may choose to exclude it and make yourself feel better. Bottom line #2 - we are now competing very well with any airline out there. And I can clearly see it is making your blood boil!!! Just admit you were wrong and we can move on to your pointless cheerleading of SWA.

JBG

Wow...what is up with these people who have a personal axe to grind with SWA?

As far as the "fuel hedges" argument goes, it cracks me up that you keep pointing to that as though it was an anomaly. Remember, any airline can hedge. It just so happened that Southwest had the foresight and the cash on hand to do so in 2000. And the reason that we had the cash on hand to buy those hedges is because 1) we had great employees who worked hard to make Southwest profitable, and 2) we had great leaders who worked hard to make Southwest profitable.

So this argument that we only made profits because we hedged is quite comical. We worked hard during the good times, in order to remain secure in the bad times that are sure to come. That's what Herb always preached. So suddenly our profits are somehow less valid because we hedged fuel? Ummm...okay. I could make the argument that the only reason UAL saw a profit is because they went through bankruptsy and forcibly got concessions from their employees, not to mention that they probably paid pennies on the dollar for some of their other debts. But that argument doesn't negate the fact that they made a profit...so who cares?

As Gary said back in early 2006, we have five more years of fuel hedges. And that's a blessing, not a curse. That gives us five years to make the necessary changes to our airline in order to remain competitive and profitable. And remember, our CASM ex-fuel is still one of the lowest in the industry (actually, we trade places with AirTran every once in a while over who has the lowest CASM ex-fuel).

JBG, grow up and go worry about your own airline. If SWA is as doomed as you say, then you shouldn't have any reason to get so worked up. When you get on this board and make your rants, you only make yourself look jealous and immature.

 

[WNrforlife]

Wow...what is up with these people who have a personal axe to grind with SWA?

As far as the "fuel hedges" argument goes, it cracks me up that you keep pointing to that as though it was an anomaly. Remember, any airline can hedge. It just so happened that Southwest had the foresight and the cash on hand to do so in 2000. And the reason that we had the cash on hand to buy those hedges is because 1) we had great employees who worked hard to make Southwest profitable, and 2) we had great leaders who worked hard to make Southwest profitable.

So this argument that we only made profits because we hedged is quite comical. We worked hard during the good times, in order to remain secure in the bad times that are sure to come. That's what Herb always preached. So suddenly our profits are somehow less valid because we hedged fuel? Ummm...okay. I could make the argument that the only reason UAL saw a profit is because they went through bankruptsy and forcibly got concessions from their employees, not to mention that they probably paid pennies on the dollar for some of their other debts. But that argument doesn't negate the fact that they made a profit...so who cares?

As Gary said back in early 2006, we have five more years of fuel hedges. And that's a blessing, not a curse. That gives us five years to make the necessary changes to our airline in order to remain competitive and profitable. And remember, our CASM ex-fuel is still one of the lowest in the industry (actually, we trade places with AirTran every once in a while over who has the lowest CASM ex-fuel).

JBG, grow up and go worry about your own airline. If SWA is as doomed as you say, then you shouldn't have any reason to get so worked up. When you get on this board and make your rants, you only make yourself look jealous and immature.

Yeah, GROW UP already!!!

 

[jbguppy]

Yeah, GROW UP already!!!

I know it is painful for you guys to see so much press about how SWA is not the golden child anymore.

Your responses go to the heart of it, it was all good as long as your airline was getting the best of it. It was all good while others were feeling the pain of paycuts..

But now as your airline is simply underperforming financially - you want to be left alone.

Well you get your wish for now, but I will be waiting for SWA to step on it once again.

If you frequent this board - I will be here to point it out.

PS - SWA will either delay deliveries or accelerate aircraft retirements within the next few months. Their expansion plans are not going to help. You have the basic economics of the airline broken. Without fuel hedging you are losing money in this revenue environment?? That is a huge problem.
JBG

 

[KCFlyer]

I know it is painful for you guys to see so much press about how SWA is not the golden child anymore.

Your responses go to the heart of it, it was all good as long as your airline was getting the best of it. It was all good while others were feeling the pain of paycuts..

But now as your airline is simply underperforming financially - you want to be left alone.

Well you get your wish for now, but I will be waiting for SWA to step on it once again.

If you frequent this board - I will be here to point it out.

PS - SWA will either delay deliveries or accelerate aircraft retirements within the next few months. Their expansion plans are not going to help. You have the basic economics of the airline broken. Without fuel hedging you are losing money in this revenue environment?? That is a huge problem.
JBG

Hey, Worst case JB is that they take a 3 year break from bill paying in Chapter 11. It is truly amazing how much better you can compete after that. You should feel proud, being among the new breed of bar lower-ers in the airline industry.

 

[N421LV]

I know it is painful for you guys to see so much press about how SWA is not the golden child anymore.

Your responses go to the heart of it, it was all good as long as your airline was getting the best of it. It was all good while others were feeling the pain of paycuts..

But now as your airline is simply underperforming financially - you want to be left alone.

Well you get your wish for now, but I will be waiting for SWA to step on it once again.

If you frequent this board - I will be here to point it out.

PS - SWA will either delay deliveries or accelerate aircraft retirements within the next few months. Their expansion plans are not going to help. You have the basic economics of the airline broken. Without fuel hedging you are losing money in this revenue environment?? That is a huge problem.
JBG

Would anyone with more corporate finance smarts than me care to comment on the following factors in regards to SWA's 3rd qtr numbers?

1) The company acquired two used 737-700s from Ford Motor Co's flight department...and paid cash for both of 'em.

2) The company just re-purchased how many hundreds of millions of dollars of company stock last quarter?

3) The company has just begun contract negotiations with the pilots.

One could make the case that this company (for the near term) may be choosing to downplay its financial results. Opinions?

 

[SKY HIGH]

As Gary said back in early 2006, we have five more years of fuel hedges. And that's a blessing, not a curse. That gives us five years to make the necessary changes to our airline in order to remain competitive and profitable.

WN has enjoyed a cost advantage for many years. Their history as a niche airline gave them the opportunity to sell tickets cheaper than everyone else. They got, and vigorously protect, the reputation as a cheap-ticket airline.

While flying mostly in the southwest they were able to operate in a relatively low traffic enviroment with few delays. They enjoyed good weather for the most part and never had to own a deicing truck. They established the policy of no seat assignments and use only 737 aircraft with a single crew qualification. No interline baggage and no shared ticketing added to their ability to control costs. They also had a fairly small company and therefore the control systems in place could be trim and efficient.

As WN grew into a national airline every one of the cost advantages eroded. They fly regularly into the northeast with it's weather and traffic delays. They are met with low cost competition at almost every airport. As a result they are generally not the cheapest ticket on any given route. They are even talking about reserved seating. In almost every possible way Southwest is growing up and will someday be just like every other airline. That's not envy...it's just a fact.

 

[KCFlyer]

As a result they are generally not the cheapest ticket on any given route.

Only in America can companies file bankruptcy, then turn around and charge LESS than a non bankrupt low fare carrier and call that a "level playing field".

 

[BoeingBoy]

Would anyone with more corporate finance smarts than me care to comment on the following factors in regards to SWA's 3rd qtr numbers?

1) The company acquired two used 737-700s from Ford Motor Co's flight department...and paid cash for both of 'em.

2) The company just re-purchased how many hundreds of millions of dollars of company stock last quarter?

3) The company has just begun contract negotiations with the pilots.

One could make the case that this company (for the near term) may be choosing to downplay its financial results. Opinions?

I don't claim to have any "corporate finance smarts", but I think that #1 & #2 have no effect on the profit/loss, just cash flow.

Given that, #3 is probably a wash.

Jim

 

[Tanker]

SWA will either delay deliveries or accelerate aircraft retirements within the next few months. Their expansion plans are not going to help. You have the basic economics of the airline broken. [JBG

We acquired 2 additional aircraft from Ford for this year. Of the 8 -700s that AirTran postponed SWA got 4. Two of those will be coming in 2006 and the other 2 in 2007. Also SWA moved two aircraft from 2008 into 2007. That means as of today SWA is getting 40 aircraft in 2007, and is looking for more.
Also SWA has started to reskin 39 -300s, with an option for 51 more. Of the non-reskinned -300s the first one is scheduled to be retired in 2010.
It sure sounds to me like SWA is getting rid of aircraft.

 

[KCFlyer]

Last time I looked Jet Blue's bankers weren't building a seperate vault for their profit dollars. I see a few to many similarities between JB and People Express for my taste.

In business you quarterly & annual reports are just like high school. They are your Report Card. Refresh my memory jbguppy but which airline has made "Honor Role" for oh the last 30 years or so?

Understand jbguppy I've NEVER flown SWA, EVER. They don't offer a product I desire. BUT gosh darn it they are pros at what they do. Are their some clouds on their horizon?? YES there are but I would submit to you that Jet Blue has a much more clouded future than either SWA or my carrier of choice US Airways. Airways has demonstrated the ability out west as the former HP to battle SWA to a standoff. To date Jet Blue has NOT IMO shown the ability to go head to head with SWA successfully. SWA & JB IMO counted on US not being around now and as we can see that's not the case. In fact US may ourperform both carriers. I don't think they'll beat out SWA, but JB is a slam dunk.

PIney...don't know what the jb stands for, but he's a United pilot. Maybe it stands for "just bent"

 

[ngneer]

If we're going to bring in what Wall Street thinks, the Street wasn't very impressed with UAL's profit. The stock dropped from about 37.5 yesterday to close at under 36.

 

[jbguppy]

Well neither of them are breaking down the door to the bank with profits. Looks like US and SWA will have at least one thing in common that UA and JB will not and that is a full year profit.

Piney,
what makes you thik UA will not show a full year profit. Why do you think they booked an over 20 million dollar charge in the 3rd quarter for profit sharing. That money will only be distributed in the event of an annual profit. Based upon that, and their guidance, I think UA will show an annual profit indeed.

Get your facts straight.

JBG

 

[magsau]

If we're going to bring in what Wall Street thinks, the Street wasn't very impressed with UAL's profit. The stock dropped from about 37.5 yesterday to close at under 36.

Really? How about the forecast for jet fuel prices to rise again that was accompanied with the earnings report. UAL feels the price of oil will impact future earnings and the stock price reacted to that. Now back to the story about how LUV is fading.....

 

[ngneer]

Really? How about the forecast for jet fuel prices to rise again that was accompanied with the earnings report. UAL feels the price of oil will impact future earnings and the stock price reacted to that.

That forecast should favor WN since they still have significant fuel hedges in place for several years yet.

 

[sfb]

Look at the 3rd quarter numbers and tell me how you think UAL is competing with AMR/SWA now. We are roughly 75% of AMR's size and our net profit is 190 million compared to 15 million at AMR.

Well, dumping a bunch of debt through the bankruptcy process and wiping out the previous UAL shareholders was a big help. AMR paid out $95 million more in interest because their debt is still on the books. Moreover, $121 million of AMR's non-operating expenses came from mark-to-market adjustment on the values of future period hedge positions.

It doesn't matter that you think we leveled the field in an unfair matter - our cost structure is here to stay for over 2 more years. Cost at SWA/AMR is going up.

But, to compare apples to apples, mainline CASM excluding fuel and special items at UAUA, AMR, and LUV was as follows:

UAUA: 7.08 cents
AMR: 7.04 cents
LUV: 6.38 cents

Even while paying higher wages and operating shorter average stage lengths, Southwest's enjoys a cost advantage, excluding fuel costs, of 10% over United and American

SWA would have LOST 160 MILLION in the 3rd quarter without fuel hedges....minus their fuel hedge they are one of the financially worst performing airlines in the sector, perhaps the worst. Their stock is showing this poor performance in an ever continuing decline.

Bzzzzt. It's a good thing that pilots aren't required to have financial skills. The $200 million gain from hedges for Southwest goes against operating profits of $261 million, and the net result already included $173 million of non-operating losses due to the change in value of hedges for future periods. In any event, LUV's market cap is still well over three times UAUA's.

The facts and the numbers don't lie, SWA is on the decline. And UAL kicked SWA and AMR's butt in the 3rd quarter. What you all need to be scared of is our costs will continue to go down while they are going up at your beloved point to point low frills mid cost carrier.

United's costs are going to go down when the contracts are up for negotiation? Southwest's operating margin for Q3 was 11.1%. United's was 6.5%. Who is kicking whose butt?