Ny Times Article

[WNjetdoc]

KC, I just don't think these posters that come there from other airlines get it. Its been posted many times since yesterday about our profits EXCLUDING the hedges, but they either ignore it or are too slow to understand what the bottom line is. I think they ignore it as it doesn't fit into their doom and gloom, SWA is finished mindsets.

All I can do is go to work, do my best to make SWA the best that I possibly can. I ignore the naysayers. I know what you guys feel, I used to work at U, about 10 years ago, and it was sucking even back then, so now it must be very difficult for you guys to go to work and be proud of yourselves. I think thats why you take it out on us. You seem to be 'skeerd of your managment as they have "cut them off" and now you walk around with a "baseball bat" but no "balls" to play with.

For all you other posters out there that come over to our board and spew your doom and gloom, please take it somewhere else....its really a sad show by you guys, it makes you look desperate, or as KC posted, jealous.

 

[Bagbelt]

Guy, I hope you guys make a billion a quarter. Don't matter to me, I was pointing out that the $87 million was a one time gain on a future option. Your own CEO said the hedging program saved $297 million for the quarter. If jet Blue can't make money God help all of us.

 

[jbguppy]

Boise - San Antonio...1 stop with a change of planes in LAS. How is this costing any more than someone changing in Denver, Phoenix, or Dallas?

That's what your management was telling you...Remember - the first place your managment went looking for cost reductions was labor. Southwest has looked for other methods.

Did you not notice that the latest earnings report showed a profit...even after the savings from the hedging program were factored out?
Really? Frequency doesn't play any role in it? If what you say is true, there should never have been any fare wars going on with the legacy carriers...after all - they offered so much more for the price that customers should have flocked to them. And I'm here to tell you that if SWA raises prices, your airline (if they are smart) will raise them as well. Of course, they could come back to labor with a request for further pay and benefit cuts to maintain the "competitive edge" over SWA.
What is on the burger of the other carriers that isn't on Southwests? Assigned seats? PTV's? You sound downright PROUD to have taken pay cuts to get you BELOW the pay rate of a low fare carrier that makes a profit...and STILL have your company lose money.

Agai, I refer you to the earnings report...profit...even after factoring in the "savings" provided by hedging.
You sound jealous.

JBG

Only one problem with your view of your dominance, you are already having to charge more than 7 airlines on that 1 stop route to compete.

A 7 day advance from BOI to SAT with 1 stop costs 535.00 on southwest.com to do the 1 stop, cheapest fare available.

There are seven airlines that do the 1 stop on same dates for less, some for half of what you do on orbitz.

The myth of your low cost airline is being proven untrue everyday, why won't you come on orbitz with the rest of us...

Because you are scared to compete.

Or are you jealous?
Call me when you actually fly international.....

JBG

 

[wnbubbleboy]

Okay, lesson learned; some folks just can't add anything to the discussion. I'll direct my comments to those who have an opinion worth considering.

Right back atcha big guy.

 

[hobbes]

Only one problem with your view of your dominance, you are already having to charge more than 7 airlines on that 1 stop route to compete.

A 7 day advance from BOI to SAT with 1 stop costs 535.00 on southwest.com to do the 1 stop, cheapest fare available.

There are seven airlines that do the 1 stop on same dates for less, some for half of what you do on orbitz.

The myth of your low cost airline is being proven untrue everyday, why won't you come on orbitz with the rest of us...

Because you are scared to compete.

Or are you jealous?
Call me when you actually fly international.....

JBG

Couple of things to remember:

Southwest doesn't claim to always have the lowest fares. Sometimes we don't, sometimes we do. However, if there was no Southwest for the legacies to compete with, I seriously doubt there would be any low fares at all. Let's not kid ourselves here. Southwest charges as little as they can, and still makes a healthy profit, while the legacies have traditionally charged as much as they can.

And the question is not just about who is charging low fares. The question is who is doing it AND making a profit. Let us know when your airline can compete AND make a profit. Then I'll take you seriously. In the meantime, your airline is just charging those low fares and taking the loss from your paycheck.

You obviously don't know why we pulled out of Orbitz...we pulled out because they were making illegal connections that weren't in our system. When that happens, the Customers hold US accountable...not Orbitz. In addition, we've invested a lot of time and money in southwest.com, so why on EARTH would we care to be a part of Orbitz? Over 60% of our reservations are made at our own website, so why should we PAY Orbitz to be on their website? It's the same reasons we aren't on a lot of travel websites:
1) We have invested a lot in southwest.com, and it does well
2) We want to be able to control our level of customer service, and not have our Customers get angry when the screwup occurs on a website that we don't own. I believe this is the reason we're not on Travelocity, either.

And as far as being scared of competition goes...stop and think before you type. All Southwest has known since our inception was other airlines trying to put us out of business. So your "scared of competition" comment makes zero sense.

Flying international? This is the mark of a "real airline?"

Your post has all the thought and maturity of "my dad can beat up your dad."

 

[corl737]

SWA is a one trick pony - low cost, and oops you gave your employees too many raises. Are the SWA employees ready for some givebacks? I have 2007 for your first round of concessions.

Regarding employee raises: remember that (to my knowledge) no labor group at SWA negotiated industry leading pay. Instead, as other airlines kept looking to their employees for concessions we came to the top by default.

As the legacy carriers recover, don't you think their labor groups will be looking for "payback?"Do you really think those union leaders will allow much of that money to be diverted to the corporate coffers after they've been subjected to so much humiliation? Thus, the SWA "low cost" model prevails as other airlines are unable to keep their disgruntled employees from demanding their fair share of the newly found profits.

Even JetBlue and AirTran will see increases in labor costs as their employee longevity rises every day! SWA will see this aging workforce effect, too, but has less downside due to its already having a significant percentage of "top step" wage earners.

All this being said, if SWA Management determines that givebacks are necessary, we are ready and willing to discuss the issue.

 

[corl737]

There are seven airlines that do the 1 stop on same dates for less, some for half of what you do on orbitz.
The myth of your low cost airline is being proven untrue everyday, why won't you come on orbitz with the rest of us...

The algorithms used by revenue departments are extremely complicated -- and well beyond what I can comprehend! It is quite possible that the number of available "lowest fare" tickets were sold out and not available at the time you looked. I'd recommend booking your flight earlier!

SWA is most definitely a "low cost" airline. Your statement reveals a confusion between the terms "low cost" and "low fare". Low Cost airlines offer tickets at prices slightly higher than costs yet lower than the market average thus ensuring a profit. Low Fare airlines , on the other hand, sacrifice yield to woo customers through prices that are below their costs. Independence Air comes to mind.

As for not being on Orbitz, it's a business decision. When one of our customers goes to Southwest.com they will get to see every single fare that SWA offers along with a clearly written description of the conditions and restrictions applicable to that flight. When a fare is not available, the SWA website says so. This educates the customer making it even easier the next time they use southwest.com.

You said Orbitz had the BOI-SAT priced on SEVEN airlines? No wonder folks book on SWA.com first! Seven is just way, way too confusing! The successful competitor is the one that doesn't lose their identity by becoming just one of the sheep in the flock. They do their best to become distinctive in the customer's mind. It seems to me that any airline on Orbitz (or any other "online clearinghouse") is resigning itself to simply being lumped into the crowd of "participants" rather than standing on their own merits. Of course, that's just my opinion!

Call me when you actually fly international.....

Ring, ring, ring! We've been flying from Texas to the United States for years!

 

[jbguppy]

The algorithms used by revenue departments are extremely complicated -- and well beyond what I can comprehend! It is quite possible that the number of available "lowest fare" tickets were sold out and not available at the time you looked. I'd recommend booking your flight earlier!

SWA is most definitely a "low cost" airline. Your statement confusing this with the difference of being a "low fare" airlines. Low Cost airlines offer tickets at prices that make a profit. Low Fare airlines often set prices that are below their costs. Independence Air comes to mind.

As for not being on Orbitz, it's a business decision. When one of our customers goes to Southwest.com they will get to see every single fare that SWA offers along with a clearly written description of the conditions and restrictions applicable to that flight. When a fare is not available, the SWA website says so. This educates the customer making it even easier the next time they use southwest.com.

You said Orbitz had the BOI-SAT priced on SEVEN airlines? No wonder folks book on SWA.com first! Seven is just way, way too confusing!
Call me when you actually fly international.....
Ring, ring, ring! We've been flying from Texas to the United States for years!

While I disagree that SWA is a low cost airline, (I believe you are, excluding fuel, a middle cost airline)
I love the quote about Texas,

Actually orbitz is very easy and gives you a choice, it is where airlines compete - SWA doesn't want to go there because it fears a side by side comparison. Low cost is all there is....

If you are not the cheapest, you are not competitive except for point to point flying.

Increasing labor rates, disappearing hedges, a 2nd fleet type in the future, leaving your niche, taking on too many competitors....You really are setting yourself up with a fight against everyone. Now DEN and UAL/F9.
Your reap what you sow and things are not changing for the better for you.

There are a lot of reasons why the future will be much harder than the past for LUV. I predict you will not take all your scheduled deliveries in 2007 and beyond.

Good Luck,

JBG

 

[corl737]

There are a lot of reasons why the future will be much harder than the past for LUV. I predict you will not take all your scheduled deliveries in 2007 and beyond.

No doubt the "low hanging fruit" has already been picked and the future will be more difficult. I hope you're wrong about 2007+ deliveries, but then, only time will tell. It is up to us whether or not we continue to succeed or fail.

Thanks for the "good luck" wishes. Everyone in this screwed-up industry needs it!

 

[wnbubbleboy]

Only one problem with your view of your dominance, you are already having to charge more than 7 airlines on that 1 stop route to compete.

A 7 day advance from BOI to SAT with 1 stop costs 535.00 on southwest.com to do the 1 stop, cheapest fare available.

There are seven airlines that do the 1 stop on same dates for less, some for half of what you do on orbitz.

The myth of your low cost airline is being proven untrue everyday, why won't you come on orbitz with the rest of us...

Because you are scared to compete.

Or are you jealous?
Call me when you actually fly international.....

JBG

YAWN.........Call us when your company gets out of Bankruptcy.

 

[KCFlyer]

Only one problem with your view of your dominance, you are already having to charge more than 7 airlines on that 1 stop route to compete.

Of those 7, how many are either bankrupt or been in bankruptcy, or bought a bankrupt carrier or showing a loss? Perhaps SWA knows something the other seven don't.

A 7 day advance from BOI to SAT with 1 stop costs 535.00 on southwest.com to do the 1 stop, cheapest fare available.

Now...price a 7 day advance purchase from Dallas to Kansas City. $535 doesn't seem half bad, now does it?

There are seven airlines that do the 1 stop on same dates for less, some for half of what you do on orbitz.

Are any of those charging half in bankruptcy? Any guesses as to why?

The myth of your low cost airline is being proven untrue everyday, why won't you come on orbitz with the rest of us...

I don't work for Southwest, but from what I understand, it costs to be on Orbitz. I know, it's better to have labor give up pensions so that you can stay in Orbitz, right?

Because you are scared to compete.

Hmmm...profitable. How is that not competing?

Or are you jealous?
Call me when you actually fly international.....

Again, I don't work for Southwest, but you know, Southwest never set out to be all things to all people. Why do I care if you fly to Copenhagen when I only wanted to go to Nashville? Southwest had something called a "business plan", and they've stuck to it for 30 years. Are the "real" airlines full service or low fare or international or podunk city servers...why...they're all of the above. Seems like in the quest to be all things to everybody, you've lost sight of whatever it was you did well.
JBG

 

[javaboy]

According to an article in today's NY times, Southwest's lucrative fuel hedging will be cut by
one third in 2006, and it will add 500-600 million dollars to cost, erasing the 313 million dollar profit in
2004, and expected 400 plus in 2005.

Welcome to the real world?

Wouldn't the plan go something like this......
approximate passengers (not segments) per year 100million,
you charge just 5.00 per passenger you get a quick 500million in cash.
yeah i think they can raise prices by a whopping 5.00 and not lose too many customers.


<_<

 

[ClueByFour]

While I disagree that SWA is a low cost airline, (I believe you are, excluding fuel, a middle cost airline)

Your belief is wrong. Ex-fuel, LUV's CASMs is lower than everyone except B6 (and maybe) Cirtrus. None of the legacies (post-concessions) are even close.

Actually orbitz is very easy and gives you a choice, it is where airlines compete - SWA doesn't want to go there because it fears a side by side comparison. Low cost is all there is....

Southwest drives a huge amount of their own bookings thru their own website. This costs them X.

Everyone on orbitz has their own websites, and cannot seem to drum up enough sales. Ergo, they then pay Orbitz to do so. It has nothing at all to do with "competing." Methinks you might be trolling a bit.

If you are not the cheapest, you are not competitive except for point to point flying.

Wrong. LUV's change policies don't make you feel like someone is trying to steal your wallet, unlike every legacy. I commute between two LUV cities. Most of that travel is booked on LUV regardless of the fare comparison to anyone else because I know if my plans change (and they often do), I'm not going to get socked with a change fee plus the fare differential. I know that if I don't go, I have a year to use the credit.

Increasing labor rates,

While expanding, thus spreading the increase out over additional ASMs and revenue (thus negating the impact)

disappearing hedges,

As has been pointed out here, that's simply not true. Unless you count 2008-2009 as "dissapearing."

a 2nd fleet type in the future,

I'd say only if Boeing builds LUV exactly what they want.

leaving your niche,

Which is what? Point to point in Texas? California? Midsized cities (BNA,RDU)? Statewide shuttle service (PA)? O&D out of huge O&D markets (ORD, LAX, OAK/SJC, LAS).

taking on too many competitors

They don't look at it that way. Pick an underserved and overpriced market, with a million or more O&D boardings per year. PHL, PIT, ORF, DEN. They all qualify (DEN, despite F9, is still overpriced and underserved). Why do you think they want Wright repealed so badly? Answer: in the long haul market, DAL is way overpriced.

Besides, who has really ever beaten Southwest back?

....You really are setting yourself up with a fight against everyone. Now DEN and UAL/F9.
Your reap what you sow and things are not changing for the better for you.

I don't work for them, but if LUV has it bad, the legacies are going to have it much, much worse.

There are a lot of reasons why the future will be much harder than the past for LUV. I predict you will not take all your scheduled deliveries in 2007 and beyond.

I predict that the tooth fairy will deliver a clue to legacy airline management. I'm not holding my breath.

 

[WNJETFIXER]

Your belief is wrong. Ex-fuel, LUV's CASMs is lower than everyone except B6 (and maybe) Cirtrus. None of the legacies (post-concessions) are even close.
Southwest drives a huge amount of their own bookings thru their own website. This costs them X.

Everyone on orbitz has their own websites, and cannot seem to drum up enough sales. Ergo, they then pay Orbitz to do so. It has nothing at all to do with "competing." Methinks you might be trolling a bit.
Wrong. LUV's change policies don't make you feel like someone is trying to steal your wallet, unlike every legacy. I commute between two LUV cities. Most of that travel is booked on LUV regardless of the fare comparison to anyone else because I know if my plans change (and they often do), I'm not going to get socked with a change fee plus the fare differential. I know that if I don't go, I have a year to use the credit.
While expanding, thus spreading the increase out over additional ASMs and revenue (thus negating the impact)
As has been pointed out here, that's simply not true. Unless you count 2008-2009 as "dissapearing."
I'd say only if Boeing builds LUV exactly what they want.
Which is what? Point to point in Texas? California? Midsized cities (BNA,RDU)? Statewide shuttle service (PA)? O&D out of huge O&D markets (ORD, LAX, OAK/SJC, LAS).
They don't look at it that way. Pick an underserved and overpriced market, with a million or more O&D boardings per year. PHL, PIT, ORF, DEN. They all qualify (DEN, despite F9, is still overpriced and underserved). Why do you think they want Wright repealed so badly? Answer: in the long haul market, DAL is way overpriced.

Besides, who has really ever beaten Southwest back?
I don't work for them, but if LUV has it bad, the legacies are going to have it much, much worse.
I predict that the tooth fairy will deliver a clue to legacy airline management. I'm not holding my breath.

Very Good Post!!!! To the point.

 

[goingboeing]

i find it reprehensable that so many people are waiting for swa to fall. mind your own business and worry about the well being of your own companies. We will worry about ours as traditionally the employees all have done in the past and as usual we will make it through the tough times. :down:

Are you aware that there are other teams on the field besides SWA? There are no airlines operating in isolation and what happens at one airline can affect all the other airlines.Ticket pricing and fuel prices are examples of cause and effect.
I'm not one to predict the demise of SWA but you do not operate in a vacuum bubble and factors that affect the airline industry also will affect you.