SOUTHWEST swings to third quarter

Here comes the parade of trolls.... :rolleyes:

P.S. It's not the end of the world as we know it.
 
:shock: :shock: :shock:

Oh no. The end of the world is nigh. One quarterly loss in 17 years. No doubt about it. WN should just close up shop and put the planes up for sale on Ebay. :lol:

While some of you are gloating, compare their traffic for the quarter and their loss vs. the traffic for the rest of us and our losses. My airline lost $360 million during the quarter, and it was not our first losing quarter in 17 years. It wasn't even our first losing quarter this year.
 
Can somebody help me out. Why are the news outlets saying our 3Q profits are in the red? But all the Kool aid i am hearing from HDQ is saying we still made a profit. Anyone have the answers? :huh:
 
ramper_in_las said:
Can somebody help me out. Why are the news outlets saying our 3Q profits are in the red? But all the Kool aid i am hearing from HDQ is saying we still made a profit. Anyone have the answers? :huh:
Click to expand...
Ramper,

I'm not an accountant and how I understand the announcement could be wrong and I don't want any troll's pointing their finger and trying to get a "gotcha" moment.

WN's fuel hedge has been successful the past few year's because a hedge basically is a bet that fuel price's are going to go higer. WN's hedge was proved prophetic because fuel has increased so much and in the past year dramatically. In July, at the start of the quarter, a barrel of oil was selling for $147.00 and change. Today, oil closed at $69.00 and change, a drop of 74%. So at the beginning of the quarter, WN had an asset on their accounting book's to show the difference of what the hedge was worth. With today's announcement, WN did make a profit of $69Million, however, WN stated that their hedge was not worth as much as it was before. So they deducted a paper asset. WN stated that their loss was "X" amount and wrote it off. To anyone who does not like WN, they are going to have their day and say, ha, ha ha. What the employee's should know is that the time's are tough, the balance sheet is excellent and to keep working as productivly as possible.
 
That's basically it. At the end of each quarter, hedge positions that haven't been settled (are still outstanding) are revalued to their market value. Since the price of oil (or more specifically heating oil or diesel used to hedge against jet fuel price fluctuations) fell in the 3rd quarter, the book value of unsettled positions was changed to reflect market prices at the end of the quarter. That resulted in a paper "loss" of nearly $250 million, which was included in "Other Expenses". That resulted in a net loss being shown on the income statement.

For comparison, in the 2nd quarter when fuel prices were climbing WN had about $1.2 billion in paper "profit" from revising the book value of unsettled hedges. That was not shown in "Other Expenses" but only on the balance sheet. So taking the paper "loss" out of the 3rd quarter numbers makes them correspond to the 2nd quarter reporting. In other words, it gives an apples to apples comparison rather than an apples to oranges comparison.

Jim
 
does this plane go to paris said:
Ramper,

I'm not an accountant and how I understand the announcement could be wrong and I don't want any troll's pointing their finger and trying to get a "gotcha" moment.

WN's fuel hedge has been successful the past few year's because a hedge basically is a bet that fuel price's are going to go higer. WN's hedge was proved prophetic because fuel has increased so much and in the past year dramatically. In July, at the start of the quarter, a barrel of oil was selling for $147.00 and change. Today, oil closed at $69.00 and change, a drop of 74%. So at the beginning of the quarter, WN had an asset on their accounting book's to show the difference of what the hedge was worth. With today's announcement, WN did make a profit of $69Million, however, WN stated that their hedge was not worth as much as it was before. So they deducted a paper asset. WN stated that their loss was "X" amount and wrote it off. To anyone who does not like WN, they are going to have their day and say, ha, ha ha. What the employee's should know is that the time's are tough, the balance sheet is excellent and to keep working as productivly as possible.
Click to expand...



Thats right, and it is excellent and amazing that SWA has had very good profitable years.. It will be mgmts job now to pull a rabbit out of a hat to keep bringing in new revenue, hedges are great, but it can be a double edged sword, and this is proof...
 
[
The so called rabbit you are looking for is constantly being pulled out of the hat at WN. The very basic management theory is that you must manage your good time's to weahter the bad time's. WN has not strayed far from that and succeded, much to the detriment of their competitor's. The fuel hedge's are just one part of extensive well managed company that is going to be around for a long time.
 
Southwest's string of profits, in my opinion, will NEVER be equaled.

Kinds like the NY Yankees..Joe DiMaggio's "56" consecutive game hitting streak(another record that Never will be equaled.)

Southwest has NOTHING to be ashamed of, and NO ONE is in any position to be critical of their Outstanding Financial success's !!
(and this coming from ME, a non WN fan)
 
Interestingly, because it WAS a "paper loss", Gary has already said we'd be receiving profit sharing on the $69 million operating profit number.

This is an example of keeping a contract with your Employees. Personally, I'm amazed, and gratified.
 
swflyer said:
Interestingly, because it WAS a "paper loss", Gary has already said we'd be receiving profit sharing on the $69 million operating profit number.

This is an example of keeping a contract with your Employees. Personally, I'm amazed, and gratified.
Click to expand...

Just when I think that I can not possibly be any more astounded at how well WN employees are treated by their management, I get more astounded. My company, AMR, would not hesitate to use that paper loss as an excuse to cancel profit sharing--by the way, could someone at WN explain to me what that word, profit, means? And, once you've done that explain the concept of sharing to me--particularly when it is coupled with that word, profit. That is not a phrase with which I am familiar. :lol:
 
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