Profits

[SKY HIGH]

FALL SHARPLY: Southwest Airlines 3Q Profit Falls

Southwest said it earned $48 million, or 6 cents per share, in the July-September quarter compared to $210 million, or 26 cents per share, a year earlier.

Fuel costs rose 67.1 percent to $563 million, even though Southwest said it saved $200 million by hedging its fuel spending.

Southwest has paid extra to lock in lower prices for about 85 percent of its fuel purchases through next year, but it has less protection against high fuel prices after that.



Even with the hedges, fuel costs rose SIXTY-SEVEN PERCENT? That would more or less put them in the ballpark with everyone else. It looks like Southwest's cost advantages are quickly eroding, and soon, they'll be just another airline with ugly brown jets.

 

[wnbubbleboy]

FALL SHARPLY: Southwest Airlines 3Q Profit Falls

Southwest said it earned $48 million, or 6 cents per share, in the July-September quarter compared to $210 million, or 26 cents per share, a year earlier.

Fuel costs rose 67.1 percent to $563 million, even though Southwest said it saved $200 million by hedging its fuel spending.

Southwest has paid extra to lock in lower prices for about 85 percent of its fuel purchases through next year, but it has less protection against high fuel prices after that.
Even with the hedges, fuel costs rose SIXTY-SEVEN PERCENT? That would more or less put them in the ballpark with everyone else. It looks like Southwest's cost advantages are quickly eroding, and soon, they'll be just another airline with ugly brown jets.

Where's my Broker! SELL! SELL! SELL!

 

[QA4Jet-A]

I doubt I'd be hitting the panic button. WN is very well set financially. There were some 'one time' cost factors that I didn't catch, but hey, they run a solid ship. IMHO, They will continue to lead the pack and no, I don't work there. I work for the one who tries to stay quiet and make enough to get buy...

 

[jbguppy]

I doubt I'd be hitting the panic button. WN is very well set financially. There were some 'one time' cost factors that I didn't catch, but hey, they run a solid ship. IMHO, They will continue to lead the pack and no, I don't work there. I work for the one who tries to stay quiet and make enough to get buy...

The money is leaving LUV in the market today. Heavy volume and down early...inveitable based upon deteriorating results vs improving at other carriers.

SWA is reaping what it sowed, I think you will see them back off expansion and delay deliveries if this continues, perhaps increasing aircraft retirements and slowing down or stopping hiring IMO.

Spin this KC Flyer....hard to refute that once the fuel hedges wear off this company is just an also ran in the industry.

JBG

 

[ramper_in_las]

The money is leaving LUV in the market today. Heavy volume and down early...inveitable based upon deteriorating results vs improving at other carriers.

SWA is reaping what it sowed, I think you will see them back off expansion and delay deliveries if this continues, perhaps increasing aircraft retirements and slowing down or stopping hiring IMO.

Spin this KC Flyer....hard to refute that once the fuel hedges wear off this company is just an also ran in the industry.

JBG

1. If you look at our trend reports generally the 3rd quarter is our slowest time of the year.

2. Before you count us out because of a slow quarter (and we have been profitable for the last 34 years) don't you think we may an ace up our sleeve?

3. Our hedges are coming to an end yes >>BUT<< the price of fuel is falling despite OPEC cutting production because inventories of fuel are high. So don't you think our hedges are coming to an end at a good time???

4. We have already anounced that there won't be any new airports added for 2007. So I think we are already 2 steps ahead of you.

5. You say we are reaping what we sowed. I have to say what are you talking about? Its obvious that america wants to fly on cheaper flights. SWA provided that service. SWA employees wanted a safe and reliable work environment. SWA provides this. AND SWA shares its profits with its employees. So I believe SWA has SOWED profits profits profits. And if our competitors were not savvy enough 20 years ago to jump on the low fare band wagon then who fault is that???

 

[Flufdriver]

ramper in las must be KCFlyer's kid!! If you haven't noticed, almost all of the low cost carriers are feeling the pressure from the majors as their cost get lower and lower and can compete on a "level" playing field. No ramper, nobody is calling SWA out, it's just going to be alot tougher making boat loads of money as before. I don't care that it's the slowest quarter...still a big difference going from $210 million last year to $48 million this year. Last year's $210 million was the slow time of the year also. Even LCC, Us Airways, is reported to make around $150-$200 million in the same slow time when they report very soon. That's after making $310 million the last quarter. Things are changing! Just imagine ramper how worse the numbers would have been without hegdeing at such a low price..we are just starting to see those numbers flip flop as hedgeing loses it's punch!

Ding!

 

[skyguy25]

Let's look at the REAL numbers!

""Southwest today reported a third quarter 2006 net income of $154 million, or $.19 per diluted share, excluding unrealized (SFAS) 133, “Accounting for Derivative Instruments and Hedging Activities,â€￾ gains/losses, which was flat with third quarter 2005’s performance. ""

Based on current cost trends and the stringent efforts underwayexpect fourth quarter 2006 unit costs, excluding fuel, to decline from fourth quarter 2005’s 6.68 cents.

WN lost close to 40-50 million because of the security issues as well. But now with ATA and the Wright Amendment repealed expect GREAT things in 4th quarter....level playing field? WN has had the ability to invest and re-invest their net income for years. Would love to know to know much SWA makes on interest per month just on investments! Have any of the bankrupt carriers or newly emerged ones had that opportunity? Also lets compare debt and OWNERSHIP of real estate and equipment.. FL doesn't own a single plane as i understand. what is the market cap on WN----12 13 BILLION?

 

[SKY HIGH]

3. Our hedges are coming to an end yes >>BUT<< the price of fuel is falling despite OPEC cutting production because inventories of fuel are high. So don't you think our hedges are coming to an end at a good time???

Crude closed around $57 DOLLARS today. Is your CURRENT hedged fuel in the same parkball?....uhhh. NO.

 

[jbguppy]

1. If you look at our trend reports generally the 3rd quarter is our slowest time of the year.

2. Before you count us out because of a slow quarter (and we have been profitable for the last 34 years) don't you think we may an ace up our sleeve?

3. Our hedges are coming to an end yes >>BUT<< the price of fuel is falling despite OPEC cutting production because inventories of fuel are high. So don't you think our hedges are coming to an end at a good time???

4. We have already anounced that there won't be any new airports added for 2007. So I think we are already 2 steps ahead of you.

5. You say we are reaping what we sowed. I have to say what are you talking about? Its obvious that america wants to fly on cheaper flights. SWA provided that service. SWA employees wanted a safe and reliable work environment. SWA provides this. AND SWA shares its profits with its employees. So I believe SWA has SOWED profits profits profits. And if our competitors were not savvy enough 20 years ago to jump on the low fare band wagon then who fault is that???

Huge volume to the downside, stock downgraded, net profit drop of nearly 80 percent.

Yeah, you've got something up your sleeve alright, and the wright ammendment crap is laughable,

We have all said this company was nothing but a fuel hedge program for the last few years, and it is starting to come true.

You should call OPEC and see what you can do to help prop up the price of a barrell of crude - otherwise you are headed for much tougher times.

Don't you think all the airlines that SWA has taken a bite out of and talked crap about in the press are itching to give them a little payback??


JBG

 

[magsau]

Let's look at the REAL numbers!

""Southwest today reported a third quarter 2006 net income of $154 million, or $.19 per diluted share, excluding unrealized (SFAS) 133, “Accounting for Derivative Instruments and Hedging Activities,â€￾ gains/losses, which was flat with third quarter 2005’s performance. ""

Based on current cost trends and the stringent efforts underwayexpect fourth quarter 2006 unit costs, excluding fuel, to decline from fourth quarter 2005’s 6.68 cents.

So when the other carriers were taking special charges and various other items you guys argued it was "the loss that was reported and that is that". However, now that the shoe is on the other foot it is all about how you perceive the numbers. Good one.

 

[Bagbelt]

Where is the dope who laughs at others losing their livelyhood been?

 

[wnbubbleboy]

Don't you think all the airlines that SWA has taken a bite out of and talked crap about in the press are itching to give them a little payback??


JBG

Frankly, jb, alot of us punch in and punch out and put in an honest days work. We are a compilation of cast off airline workers who have made this home. There is nothing we have to fear here. We have seen it all before.

Give up on the bitterness my freind it's a useless emotion. I have learned that first hand.

 

[KCFlyer]

ramper in las must be KCFlyer's kid!! If you haven't noticed, almost all of the low cost carriers are feeling the pressure from the majors as their cost get lower and lower and can compete on a "level" playing field.

The only "major" that is competing on a "level" playing field is American, since they have not run into bankruptcy court in order to "compete". And seeing that they are able to compete pretty well without the bankruptcy cop out, if I were UAL,LCC,Delta or Northwest - I'd be more worried about THEM than Southwest.

American seems to have figured out how to compete in periods of very high fuel prices and very few fuel hedges, and they did it without marching into bankruptcy court. And it's pretty difficult for the UAL apologists to use 9/11 as an excuse, because if I recall correctly, there were a couple of American jets in that mix as well. Dance all you want at the "downfall" of SWA - while your reveling in that event, watch your six...because there is a giant silver bird sneaking up behind you that can make Southwest seem like a tiny gnat in your life.

 

[NewHampshire Black Bears]

IMHO, I think we all realize that SWA will $$$ start to come DOWN from the lofty Financial altitude that they've been crusing in.

Having said that, I would'nt want to hold my breath UNTIL SWA actually has a losing quarter.

Gary Kelly is nobodys fool, BUT he (soon) will have his "work cut out for him"

NH/BB's

 

[ramper_in_las]

Huge volume to the downside, stock downgraded, net profit drop of nearly 80 percent.

Yeah, you've got something up your sleeve alright, and the wright ammendment crap is laughable,

We have all said this company was nothing but a fuel hedge program for the last few years, and it is starting to come true.

You should call OPEC and see what you can do to help prop up the price of a barrell of crude - otherwise you are headed for much tougher times.

Don't you think all the airlines that SWA has taken a bite out of and talked crap about in the press are itching to give them a little payback??


JBG

I agree with you on the downgrades on wn stock. Net profit not so much. I think you have forgotten our record breaking second quarter earlier this year. The impression I am getting from you is you're like an armchair quarterback whom is just sitting on his Butt waiting to say I told you so. Seems childish to me.
Payback? Why? All Southwest can be accused of is growing steadily into markets that demanded lower fares. Whos fault is that? If your Executives can not see that far down the road to stave off the Southwest effect. Who deserves the blame? This is good ol' American capitolism and in the airline biz with the volatile environment that we are currently in its either shape up or ship out.