Southwest post first loss in 17 years.

Discussion in 'Economy' started by Navy1960, Oct 16, 2008.

  1. Navy1960
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    Navy1960 Senior Member

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    DALLAS—Southwest Airlines Co. lost money for the first time in 17 years as falling oil prices forced the company to write down the value of its fabled fuel-hedging transactions in the third quarter.
    Southwest said Thursday it lost $120 million in the three months ended Sept. 30 even as revenue jumped 11.7 percent.

    The airline took $247 million in charges, mostly to write down fuel-hedging contracts that are less valuable now that oil prices have plunged by nearly half since July.

    Without the charges, Southwest managed its 70th straight quarter of operating profit—$69 million, or 9 cents per share, which was 2 cents per share better than Wall Street expected, according to a survey of analysts by Thomson Reuters.
    http://www.mercurynews.com/business/ci_10734473

    This is how you know the economy is bad, when Southwest posts a loss then you know the economy is bad.
     
  2. Care4all
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    Care4all Warrior Princess Supporting Member

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    yes, but it is understandable...the highest price of oil occured in july of this year, nearing $150 a barrel, they sell their tickets ahead of time and no one could have predicted prices so high for fuel to happen so quickly...thanks to the shenannigans of the oil speculation...the prices of their tickets during that period did not accomodate for these higher prices, since they work so close to margin...a discount chain of an airline, so to say...so all of this helped cause their loss imho.

    As long as oil stays down in price, as it is now...they should continue to have a pretty strong business plan, especially in the coming months of recession, which will make them as a discount airline, even more important...

    care
     
  3. Navy1960
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    Navy1960 Senior Member

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    Personally Care, I think this helps it sink in quite a bit because Southwest has always purchased it's fuel in large blocks when the price was down in order keep costs low. So as fuel costs rose their operating cost went up. I do believe however as long as the cost of oil is down they can get back on track, and I comepletely agree with you that a company like Southwest as a discount carrier and one of the few American Carriers that are still and all Boeing fleet it's important on several levels.
     

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