Observation on SWA

mrivc211 said:
thats not the solution, if they can't pay pilots an above avg wage, they aren't charging enough for their ticket.

I recently read an article that said United Airlines was successful in raising fares the last 6 of 10 times. They said they had no other choice but to do so because of fuel prices. So mgmt is telling us that they will raise prices for fuel, but wont to give employees back their living?
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Amen, brother!

777forever said:
I've been hearing the SWA will run out of their fuel hedges story for years now. So approximately when are they going to be on a level playing field with everybody else?
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The problem is that the people saying those things don't really understand hedging and how SWA does business. Hedging isn't something that you "run out of." Hedging is a continual practice. Yes, they "run out" of hedges at $50/bbl, but it doesn't matter because they've been smart enough to buy more hedges at $60/bbl for the next year when everyone else is paying $100/bbl. As long as you're buying hedges that keep your costs below what everyone else is paying for fuel, you still have the advantage, because you have the pricing power on fares. In other words, SWA will never "run out of hedges."
 
Maximillian_Jenius said:
Another one of my favorites is. "I'm not racist, but..."
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"Don't take offense to this, but....."

In the South, everyone always tries to make it sound nice when they're really being a-holes. :)

THe 787 rumor has been around at SWA forever. Only difference was it was 757s when I was there.
 
PCL_128 said:
Amen, brother!



The problem is that the people saying those things don't really understand hedging and how SWA does business. Hedging isn't something that you "run out of." Hedging is a continual practice. Yes, they "run out" of hedges at $50/bbl, but it doesn't matter because they've been smart enough to buy more hedges at $60/bbl for the next year when everyone else is paying $100/bbl. As long as you're buying hedges that keep your costs below what everyone else is paying for fuel, you still have the advantage, because you have the pricing power on fares. In other words, SWA will never "run out of hedges."
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That makes perfect sense. Hedging is part of and always will be part of the SWA business plan. Thanks for clearing that up.
 
B767Driver said:
Yes...but what type of hedge can you buy today for 5 years out? And would you purchase it?
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That's the million dollar question. SWA has made hundreds of millions of dollars by making the right predictions on fuel prices. Their competitive edge is dependent upon them continuing that streak. AAI management made the bet that it was unlikely that fuel would continue past $90/bbl, so they only hedged 40% of our fuel for the year. Bad bet. It all comes down to how your bets play out. Make a bad bet and buy hedges at $80/bbl and you'll be at an extreme disadvantage if oil drops to $60/bbl. So far, SWA hasn't made that bad bet.
 
It'll be interesting to see what happens when (hah!) the USD becomes stronger again.

Oil's up because of the weak dollar, and a touch of speculation. But that touch of speculation was there at $40, 50, 70, 90, and 100.

I'd hate to be the guy that hedged at 100 for a three year deal, only to see the USD regain strength and oil float back down to a more sustainable level (50-70).

Not holding my breath though.

In other words, as the dollar regains strength, we "should" see a reduction in the cost of a BBL of oil.
 
If the USD was at 2005 levels oil would be around $92/bbl right now, based upon my crude (haha) calculations.
 
B767Driver said:
Yes...but what type of hedge can you buy today for 5 years out? And would you purchase it?
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I'm not a bigger source citer, so sorry again, but I read last week that southwest recently hedged its option long term for $90 bucks a barrel. I beleive they did this when oil was hovering $88 a barrel. All of a sudden, $90 a barrel ain't lookin too bad when it's $117 everywhere else. When will the madness end? This is insane. In the last week, we've gotten 5 emails about APU usage and conserving fuel. No starting APU's more than 10 minutes prior to push(unless its hot), single engine taxi, etc etc.
 
APU on the CRJ sips gas. Where you really lose the $$$ on APU usage is the cycles for MX. I don't hold off on using the APU b/c I'm saving gas (although that's a minor part sometimes,) I hold off b/c I don't want it deferred when it's 98 degrees in MEM b/c 10 guys decided to start and stop it when it was 72 degrees in MEM.
 
I think (unfortunately - as I don't like this type of intervention) that world governments will step in eventually (when that will be. . .who knows) and take some sort of pseudo-short term action to cap the price or in an effort to remove the speculation that is never ending. Economies will not be the only thing collapsing if it doesn't end before it hits $150 or $200.

Speculators can always find something negative in the oil market to drive the price for a contract higher. Some nutcase in Nigeria causes trouble, and the idiot is now world famous.
 
Hell, I watched gas go from $3.27 a gallon to $3.37 a gallon in TWO HOURS today. Seriously. I was glad I filled up on the way to Starbucks to drop my wife off rather than on the way back.

As it is now, my "economic stimulus package" is gonna cover the increase in my budget just to get to work and back. We used to drive around and at least window shop on Saturdays. Can't even afford to look at stuff we want to buy, much less buy it. If it keeps going this way, I fear for what the holiday shopping season is gonna look like with the lack of discretionary spending.
 
kellwolf said:
As it is now, my "economic stimulus package" is gonna cover the increase in my budget just to get to work and back. We used to drive around and at least window shop on Saturdays. Can't even afford to look at stuff we want to buy, much less buy it. If it keeps going this way, I fear for what the holiday shopping season is gonna look like with the lack of discretionary spending.
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I agree. I'm about to close on a house and wonder if my job, airline, and partner airline will be there tomorrow. Nothing we can do though, except prepare for the worst and enjoy the left seat time while we have it. We stopped buying little things for ourselves years ago. It's really frustrating. You are right on with Xmas as well.

It's so frustrating, we climb the ladder and then have this energy crisis on our hands. Our government isn't doing #### about it. GW should be on TV daily giving us updates on the situation and what WE as a country are doing about it. Aloft was right on about saying how the poor and middle class drive the economy if they feel safe. I know everyone around me in my apartment complex is saying the exact same thing - they've downsized their cell phone plans, cut insurance, cut dinners out, cut spending on electronics, cut A/C usage, etc. When gas hits $4/gal I fear for what will happen to the major retailers. Our money goes to the gas companies and to the oil countries, and our jobs could disappear if this continues. I have absolutely zero security at this time in my life.
 
I was talking with a bunch of old guys at the FBO today and they were comparing the fuel prices we're seeing today to the prices during the fuel crunch in the late 70's. I wasn't even born yet to have seen it but they described the economy as just being stopped. Workers couldn't even get to work because no one had gas. Doesn't seem like that's too far around the corner for us.
 
The crunch was because of an oil embargo in the 1970's. The 'crunch' we have now isn't supply based and is a double whammy of the low valuation of the US dollar and speculation.

There's no shortage!
 
Yes! Fix the fiscal policy, dollar goes up, (relative) price of oil goes down. More oil being pumped today = larger supply at a lower (relative) cost = lower price in the future.

Or umm, something like that.

It's all about the dollar man!
 
Not when your currency has no real value what so ever.

The Dollar, in it's current form, has never been of any real value.

The rest of the world is finally coming to realize this. The countries who can actually back their currency up with metals will own us until we collapse.
 
wheelsup said:
If the USD was at 2005 levels oil would be around $92/bbl right now, based upon my crude (haha) calculations.
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Pun of the year!

Nice one!

I'll nominate one of my own, also:

A Jesus dude was laying down "indisputable" proof that there is a Creator. He pointed to my watch and said: "Who made your watch? A watch maker." He pointed to the building next to us and said, "Who made this building? A builder." Then he motioned around us:"Who created all this? A creator."

I said "I understand your logic, but it's still not working for me. I need tangible evidence, not some assumption. I need something concrete, like this building here."
tee hee.

PS, this is not intended to start a religious pissing match.
 
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