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The King (Southwest) Has No Clothes!  
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11634 times:

The First Call consensus has Southwest earning 4 cents a share or 31 Million this Quarter. This "includes" an expected gain of 180 Million due to fuel hedging. Not counting this, that's a 9% loss margin if you go with First Call's revenue estimates.

Continental a "legacy" "major" "cartel" airline with no fuel hedges and much higher debt payments, is expected to have a 7.8% loss margin. Outperforming Southwest in this respect.

If fuel were to come down, Southwest's stock price would fall like a house of cards. It hasn't sunk in that this company is making it only on fuel hedging.

123 replies: All unread, showing first 25:
 
User currently offlineCapt.Fantastic From United States of America, joined Aug 1999, 747 posts, RR: 0
Reply 1, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11562 times:

What is fuel hedging? High gas prices are keeping SW's stock from plumeting? Interesting.

SW flying around in the Emperor's New Clothes.


User currently offlineStarrion From United States of America, joined Jul 2003, 1126 posts, RR: 2
Reply 2, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11537 times:

Perhaps it hasn't sunk in yet that THEY'RE MAKING MONEY!

Several airlines are now into double digit quarters since they last saw a profit. Companies are supposed to operate in order to make a profit. UA and US are both in Ch. 11. Delta is on life support. CO and NW are both hanging on by their fingernails.

In SW case it doesn't matter where the profit comes from. Smart business decisions have led them to another profitable quarter. Others could learn from their example instead of throwing stones.



Knowledge Replaces Fear
User currently offlineBlatantEcho From United States of America, joined Sep 2000, 1916 posts, RR: 1
Reply 3, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11529 times:

Not to be mean, but the first post makes zero sense, and the second one makes less.

Both references to the "Emperor's New Clothes" (sic) are at least gross simplification of something you both don't understand, or better yet, generalities about a childrens story you don't know very well either.





[edit: clarity]

[Edited 2005-04-08 20:05:18]


They're not handing trophies out today
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 4, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11516 times:

WN's skyhigh P/E ratio exists because of this false assumption that their core business model is producing these low CASMs for which they can run rough shod over other airlines. Well guess what? It's not the core business model after all but the geeks over in fuel purchasing who have done one hell of a job along with huge amount of pure luck.

If fuel were to drop and airlines started producing margins over and above Southwest, that would be the first time in decades that this has happened.
The P/E ratio would seem way out of line. The price would drop.

[Edited 2005-04-08 20:09:16]

User currently offlineFI642 From Monaco, joined Mar 2005, 1079 posts, RR: 2
Reply 5, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11506 times:

If others had hedges in place, they wouldn't be in the poor house now.

Air Transport World (April 2005) has a great article about WN in it. WN is NOT stupid. Do what you must to show a profit... I bet DL wishes they hadn't sold their hedges . . .



737MAX, Cool Planes for the Worlds Coolest Airline.
User currently offlineIlikeyyc From United States of America, joined Dec 2003, 1373 posts, RR: 20
Reply 6, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11483 times:

Can you provide a link to this "consensus"?

Fuel hedging is basically a way to offset costs. An airline buys fuel when it is at a cheap price, only to sell it at a specified later date.



Fighting Absurdity with Absurdity!
User currently offlineDeltaMIA From United States of America, joined Feb 2004, 1672 posts, RR: 17
Reply 7, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11475 times:

Quoting BlatantEcho (Reply 3):
Not to be mean, but the first post makes zero sense

Yes it does. She is saying if WN doesn't hedge fuel they would be losing money, ie paying present prices.
Not certain of how many days, months, years they have hedged, but at some point they will have to start paying today's prices on fuel. Maybe by then their revenue will increase.



It's a big building with patients, but that's not important right now.
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 8, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11455 times:

yahoo

And fuel hedging is not to lower costs but to smooth out price spikes. Otherwise all airlines would do it, because after all it lowers their costs all the time right?


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 9, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11424 times:

"In SW case it doesn't matter where the profit comes from."

Oh it matters very much were WN's profits come from. From the core business? Or gains in commodity trading? Airlines do not trade oil futures as a profit making exercise. Only to smooth out fuel costs over time.


User currently offlineTockeyhockey From United States of America, joined Feb 2005, 952 posts, RR: 0
Reply 10, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11406 times:

Quoting Capt.Fantastic (Reply 1):
What is fuel hedging?

fuel hedging is when a company buys jet fuel at a price at which they think it will rise or fall to in the future. WN bought a ton of fuel from commodoties brokers a few years ago, at a very reasonable rate. the brokers bet that gas wouldn't go much higher than $40 per barrel. the brokers were wrong, but they still have to sell the gas to WN at that rate.


User currently onlinePHLBOS From United States of America, joined Mar 2004, 7533 posts, RR: 24
Reply 11, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11401 times:

Quoting Padcrasher (Reply 8):
And fuel hedging is not to lower costs but to smooth out price spikes. Otherwise all airlines would do it, because after all it lowers their costs all the time right?

Not if the price of fuel should drop... like it did in the mid '80s and immediately following 9/11/01.

Had the fuel prices dropped instead of risen this past year, WN's hedged rate would've been higher than the market rate.



"TransEastern! You'll feel like you've never left the ground because we treat you like dirt!" SNL Parady ad circa 1981
User currently offlinePVD757 From United States of America, joined Aug 2003, 3414 posts, RR: 16
Reply 12, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11368 times:

Isn't fuel price part of operating costs? If fuel was at $30 a barrel, then WN wouldn't need to hedge, therefore they would report the same frickin' financials. What seems to be said is here is that "WN is only making a profit because they were smart enough to hedge!" To which I would say "yup, good call on that one WN," not so much as "geesh, what they hell are they doing, they're idiots." Another analogy would be like Yankee fans saying "thank goodness we won all those chamionships, but boy were we stupid to buy Babe Ruth from the Red Sox and for drafting Micky Mantle."

User currently offlineTockeyhockey From United States of America, joined Feb 2005, 952 posts, RR: 0
Reply 13, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11357 times:

Quoting Padcrasher (Thread starter):
If fuel were to come down, Southwest's stock price would fall like a house of cards. It hasn't sunk in that this company is making it only on fuel hedging.

you forget the fact that WN has paid millions to retrofit their 73s with wingtips. they are one of the few airlines that had the cash on hand to do that. (CO is the only other one i can think of.)

this is going to save them a ton of money as fuel costs continue to rise, putting them in a great position compared to airlines flying without wingtips in four or five years.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 14, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11345 times:

Quoting PHLBOS (Reply 11):
Not if the price of fuel should drop... like it did in the mid '80s and immediately following 9/11/01.

Had the fuel prices dropped instead of risen this past year, WN's hedged rate would've been higher than the market rate.

Exactly! We have this false impression going around these boards that "hedging" always makes you money. You can never lose.


User currently offlineTockeyhockey From United States of America, joined Feb 2005, 952 posts, RR: 0
Reply 15, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11334 times:

Quoting PVD757 (Reply 12):
If fuel was at $30 a barrel, then WN wouldn't need to hedge, therefore they would report the same frickin' financials.

no, if fuel went to $30, WN would still be buying at $40 (or whatever they agreed to) and would be losers in the bet. that's all hedging is anyway -- educated betting. you're betting whether the cost of fuel will be higher or lower in a year or two years time.


User currently offlinePVD757 From United States of America, joined Aug 2003, 3414 posts, RR: 16
Reply 16, posted (9 years 6 months 2 weeks 3 days 11 hours ago) and read 11308 times:

I've been informed incorrectly then, I was told that hedging is a cap on a price versus being a definate agreed upon price - apologies!

User currently offlineTockeyhockey From United States of America, joined Feb 2005, 952 posts, RR: 0
Reply 17, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11297 times:

Quoting Ilikeyyc (Reply 6):
Fuel hedging is basically a way to offset costs. An airline buys fuel when it is at a cheap price, only to sell it at a specified later date.

sorry to be the fuel hedging nazi, but this is not correct. you agree to buy at a later date. it's called buying "futures" -- you agree with a commodoties broker that fuel will be $40 a gallon in two years. the broker hopes that the real cost of fuel in two years is lower than $40, the buyer hopes that it is higher. if it is $50, the airline wins because they are buying fuel for lower than market price two years from now. if it is $30, the airline loses because they are paying $10 more per barrel than market prices.

it's legalized gambling -- sometimes you win, sometimes you lose.


User currently offlineCapt.Fantastic From United States of America, joined Aug 1999, 747 posts, RR: 0
Reply 18, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11291 times:

And the post by BlatantEcho is essentially pointless as it adds no information or commentary to the initial post, just an empty critique of metaphors.

Incidently, if the first post makes "zero sense", than the second (theoretically) cannot make "less" than zero if we are assuming a scale of absolute zero.

If you disagree with what Padfcrasher says, than make am argument against it instead of playing English teacher.

My goodness.


User currently offlineTockeyhockey From United States of America, joined Feb 2005, 952 posts, RR: 0
Reply 19, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11236 times:

Quoting Capt.Fantastic (Reply 18):
Incidently, if the first post makes "zero sense", than the second (theoretically) cannot make "less" than zero if we are assuming a scale of absolute zero.

i would argue that a post can make negative sense.

if a post is so poorly written and so off topic, it can actually detract from the overall value of the thread, thus making a negative impact on the quality of the conversation.

anyway.

i think that WN is the smartest airline in the business, regardless of a fall in stock price right now. they are the fastest growing airline, they are making the biggest impact at airports of any other airline, and they are continually upgrading their equipment and networks. anything else need to be said on their behalf?


User currently offlineCkfred From United States of America, joined Apr 2001, 5271 posts, RR: 1
Reply 20, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11172 times:

I think the point that most everyone can agree is that if oil does stay above $50 a barrel, and many experts think it will, WN will have to eventually pay prices for jet fuel similar to what the legacies are paying.

The question then becomes whether WN will start increasing fares the way that the legacy carriers have done, seek to hold the line on wage increases or even wage cuts, or both.

Of course, if the price of oil collapses the way internet and technology stocks collapsed in 2000 and 2001, then the issue becomes moot.

AA has explored the possibility of installing winglets on the 737 fleet. With oil above $50 a barrel, cost isn't an issue. The fact that winglets add 5 feet to the wingspan is the issue, because it limits the gates where the aicraft can park. But since the 737s won't be flying to ORD much longer, that shouldn't be an issue.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 21, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11153 times:

tocky

I take you dont get the part about fuel coming down as having a lowering effect on the stock price. Let me spell it out for you as I assumed you knew too much.

Southwest's stock price is not high because they "make money". Door knob factory's have higher margins than Southwest. WN's stock is high because the market believes it can take market share from other airlines. It's a category killer. It has nothing to do with them making a crappy thirty Million.
If fuel were to go down, "eliminating WN's fuel cost advantage" the true perfomance of the business models would come out showing other airlines making more money than WN. That would be devestating to the stock price.


User currently offlineTockeyhockey From United States of America, joined Feb 2005, 952 posts, RR: 0
Reply 22, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11080 times:

Quoting Padcrasher (Reply 21):
I take you dont get the part about fuel coming down as having a lowering effect on the stock price. Let me spell it out for you as I assumed you knew too much.

i'm not sure what this means. you assumed i knew too much?

here's my point: how the heck can you argue that lower fuel costs would hurt an airline??? it only hurts WN if they lose on their fuel hedging bet (which they didn't)

in the future, who knows what the cost of oil will be. but my guess is that WN will stay on the right side of the bet.

as for your talk about WN's margins and their stock price, i wouldn't argue with you. they have an inflated stock price because investors believe that they will emerge as a dominant carrier in 5-10-25 years. i agree with that analysis.

your hypothetical situation in which WN missed on their hedge is just that -- hypothetical, and therefore pointless. if ifs and buts were candy and nuts...

they made the right bet, they are doing very well, they are growing and pressuring other airlines. what else do you need to know about them?


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 23, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11039 times:

Quoting Tockeyhockey (Reply 22):
how the heck can you argue that lower fuel costs would hurt an airline???

Tocky you not getting it. I did not say hurt "Southwest". Only the "stock price" Two entirely different things.


User currently offlineNtspelich From United States of America, joined Aug 2003, 764 posts, RR: 0
Reply 24, posted (9 years 6 months 2 weeks 3 days 10 hours ago) and read 11038 times:

And, I hate to break it to you, but we're 100% hedged for the third and fourth quarters of this year, something like 75% hedged next year and already 60-some% hedged for 2007.

Call it what you want, but I call it sound financial planning and excellent foresight by our leadership, both corporate and financial.

NTS



United 717 heavy, you're facing the wrong way. Any chance you can powerback to get off of my deice pad?
25 Starrion : And if your Aunt had balls she'd be your uncle. Fuel prices ARE astronomical. Most of the airlines ARE suffering dreadfully. This is likely to contin
26 Padcrasher : I made reference to their high P/E ratio. Where do you get I don't like them?
27 Jacobin777 : Tockeyhockey is correct... Fuel hedging is part of the whole airline strategy, one of many parts...so to say they got "lucky" is a bit off......its pa
28 Starrion : I've seen several posts from you regards SW and the tone has been pretty negative. The title of this thread has a derisive tone to it as well. And I u
29 Tockeyhockey : i don't like to fly WN either, but i am impressed by their business model, and, more importantly, their business choices. lPHL, BWI, SAN, 73G, wingtip
30 PlaneSmart : Fuel hedging is used by businesses to create future certainty. For an airline, they can sell tickets 6 months forward, knowing what price they will pa
31 Pope : "If fuel were $30 a barrel" Yeah right. The days of $30/barrel fuel are gone. There are many days of $60/barrel fuel ahead of us than $30/barrel fuel
32 Gokmengs : I know they save money but I doubt if they would make or break an airline or would save a "ton" like you said. Correct me if I'm wrong but I thought
33 Padcrasher : My tone...LOL OK starrion. I'll try and keep my post regarding the business model more upbeat...By the way, you can go jump in lake.
34 Post contains images ContnlEliteCMH : Wow, a woman who talks money. That is super sexy. Do you like football too? And are you married?
35 Texan : WN has hedged 100% of their fuel for this year. They have hedged a good amount for next year. As oil prices are believed to keep rising until July, at
36 Mariner : But Southwest's stock price is not all that high, and has not been for some time. Presently, it (LUV) is trading below $15, while JetBlue (JBLU) is al
37 Tango-Bravo : Fuel prices are almost sure to remain at or near (or even higher than) current levels unless there is a major collapse of a significant sector of the
38 Justapassenger : I think that the most interesting thing about all of this is that WN could make a lot more money this year by shutting down the airline and selling it
39 PlaneSmart : Texan 'WN has hedged 100% of their fuel for this year. They have hedged a good amount for next year. As oil prices are believed to keep rising until J
40 PVD757 : Bad business decision: Southwest has just decided to sell only 1 seat per flight from now on. This will surely reduce revenues and negatively effect t
41 MaverickM11 : "Call it what you want, but I call it sound financial planning and excellent foresight by our leadership, both corporate and financial. " It's mostly
42 N1120A : The thing that hedging has done for them is plan out their profit margins. Sure, oil could have dropped to 10 dollars a barrel people would say WN go
43 CALPILOT17 : wn hedged a $26 a barrel compared to almsot $60, a smart move. I think this post has really turned away from it inital point. Southwest is only the go
44 Post contains links Jacobin777 : actually, price of the stock is only part of the equation, it also depends on the amount of shares outstanding... if company xyz's stock price is $10
45 WhiteHatter : None of you have addressed another point which may become extremely relevant, hedge defaults. This is something which is worrying the fuel purchase di
46 Texan : PlaneSmart, I do not have the statement in front of me, but Gary Kelly said in an interview with The Dallas Morning News late last year that all fuel
47 Incitatus : Pad: You have a point but (i) you don't have to be negative about it and (ii)your "otherwise" scenario wouldn't hold. Southwest hedged its fuel - the
48 Indy : This might have been covered before but I thought someone had mentioned before that the legacies were not allowed to hedge on fuel prices. Is that inc
49 Post contains links FATFlyer : I don't know what Texan saw but I've seen this info recently. Chief Executive Officer Gary Kelly told investors on a Jan. 19 conference call that the
50 Post contains images Mariner : While what you say is true, it is somewhat irrelevant to the debate, and certain facts remain. LUV is trading at less than $15 and JBLU is trading at
51 Drdivo : Actually, that's not quite true. All of the legacy carriers would have been hedged to a given percentage of planned fuel consumption, as was said, ba
52 DfwRevolution : They were allowed to, they simply didn't have the money to do so. There isn't any "regulation" saying which airlines can hedge and which cannot. WN h
53 Tango-Bravo : Yes -- it is incorrect. It isn't an issue of the legacies being prohibited from fule hedging -- they have simply been in no position to do so since "
54 Post contains links Drdivo : http://www.dallasnews.com/sharedcont...es/040805dnbussouthwest.a1066.html
55 Drdivo : It's very interesting to me, but WN's ability to keep hedging stems primarily from their brilliant market cap and credit rating - CO (for instance) h
56 Mariner : Sorry, but that simply isn't true. United, for example, was able (allowed by the judge) to hedge some fuel needs while in bankruptcy, and it is hard
57 Ejmmsu : WN sets fares on most routes. When a route has WN competition, its usually $100-300 cheaper than a non-WN route. Thats why BNA to anywhere out west is
58 Post contains links AeroWesty : There are a lot of misconceptions on how fuel hedging works for the airline industry. It is rarely met with a "buying ahead" theory that locks in a se
59 Aloha73G : Good business is good business, whether or not it involves the company's core product. My University just figured out that by renovating residence hal
60 N1120A : Well, CO does have the history of 2 bankruptcies and major screwing of their creditors, but those creditors ended up getting back what they lost (esp
61 Wjcandee : I personally believe that folks who think that fuel is going to stay at this level will be licking wounds come two months from now. You may revisit th
62 ContnlEliteCMH : Even if you're right, and I hope you are, the US just took a major hit in refining capacity with the refinery explosion in Texas. This, as peak drivi
63 Wjcandee : ContnlElite: The US does have fewer refineries than it used to have, which have to make specific blends for specific states (and even some specific ci
64 Frontiers4ever : They may be hedging fuel but their still debiting cash and not crediting like the rest of the airlines. -Frontiers4ever
65 Lufthansa : Padcrasher, I think you've hit the nail on the head. The trouble is, most of the ppl here don't have the business knowledge you do and really can't un
66 Mariner : Lufthansa: Wow. You state a possibility, and then claim it to be a fact? Yet you start by saying: If you haven't looked at the figures recently, how d
67 Sv11 : Well if WN did not have the fuel hedging, they probably set their fares higher but it would probably be lower than others due to their cost advantage
68 Post contains links Drdivo : Not true. The primary component of a publicly traded corporation's credit rating is its market capitalization. Depending on weighted factors, the mar
69 Post contains images AeroWesty : I'd be really interested in how you came up with the $1.5B figure. You can explain it in as technical of terms as you want. I used to calculate margi
70 Mariner : I don't blame them for that. After 9/11, airline access to the finance markets largely disappeared, which is why the ATSB was created. But - (a) wher
71 Vegas005 : Hedging fixed price risk Hedging fixed price risk is simple. If you buy a physical commodity at, say, $30/bbl, you are exposed to any wild swing in th
72 Post contains images Lockheed1011 : Southwest was good in the 80's, 90's and now even better. Why do you think everybody in the world is imitating them? Jetblue is doing fine so far. Let
73 Lightsaber : I agree that CO would have outdone WN without hedging. Then again, isn't CO doing the best of all of the "majors?" But WN has the hedges. They are pr
74 Wukka : As far as fuel hedging goes; WN's accountants with the blessing of their superiors walked up to the slot machine with a fixed amount of dollars allott
75 Ejmmsu : Also, even if WN raises their fares some, they will still be the fare setters in their routes. As long as DFW-BNA on AA costs twice as much as OKC-DFW
76 Lufthansa : Mariner, i bet you're one of those ppl who think if you have nice handwriting the content doesn't matter? Yes im too lazy to use the spell check...so
77 Mariner : Lufthansa: Whether you use the spell check or not is completely irrelevant - until you start questioning other people's education/understanding/etc. I
78 Leelaw : Thanks for taking the time to compose your excellent reply. You certainly understand hedging strategies, futures markets, econmics, and cash flow man
79 Post contains links 1MillionFlyer : Market Cap is not an Icome Statement OR Balance Sheet contributor folks. As a matter of fact market cap does ZERO for helping provide cash flow to th
80 Lufthansa : 1MillionFlyer No its not. I said good on southwest for signing the right deal this time. BUT if that advantage can't be sustained, then that is a seri
81 Padcrasher : Hello? There were also many highly educated people that made a very detailed analysis of the fuel trends before they were involved in "SELLING" the h
82 EXMEMWIDGET : There was an article about this very topic in yesterdays Dallas Morning News. It basically said that if it were not for Southwest's fuel hedging progr
83 Mariner : Lufthansa: The question is not whether the "inferior goods" theory is valid. It is whether or not Southwest is "inferior goods." "In consumer theory,
84 Padcrasher : Mariner your reading too much into the use of the term. Strictly speaking, an inferior good is a good that has the property that when a person's incom
85 Mariner : Well, (a) I do understand the term "inferior goods" and (b) I agree that it has little to do with Southwest, which is the point I have been trying -
86 Irishjohn : There used to be a time when a dollar profit was a............dollar profit! Seems to me that, based on the previous messages, profit has come to be s
87 ScottB : You know, you might be halfway credible if you actually had some understanding of finance and could grasp the fact that the analyst estimates apply t
88 Padcrasher : scott you remind of 18 year old that just completed his first econ 101 class. OK Southwest would have made 50 Mil rather than 31 without the taxes. In
89 ScottB : Padcrasher- While you may feel it's only glossing over "a minor point," the entire premise of your little tirade was that Southwest would have been wo
90 Incitatus : Airlines are transportation companies - they move people. Southwest is competent on delivering it. If it's inferior or not, depends on what attribute
91 Douglas7Seas : Regarding Southwest: There are lies, damn lies and statistics. This per Mark Twain. When I travel from Seattle/Tacoma to LAX (about once a month) I ha
92 Lemurs : The thing that I want to address here is that while Southwest should be lauded (and is being rewarded) for their great decisions when hedging fuel, no
93 Mariner : Lemurs: Here we go again. Hollywood High School has an oil well in the middle of the campus. The school earns a deal of money from that oil well. But
94 Post contains images Lemurs : Mariner, you're reading way too much into what I said instead of reading what I said. I never said they shouldn't keep their money or anything ridicul
95 AirFrnt : Southwest's P/E is not incredibly out of line with a lot of businesses. It is out of line compared to the legacies, but that is because the legacies
96 Lufthansa : Mariner, You have totally missed the point. Unlike your oil well, southwest can't stop flying aircraft because it has signed lease agreements and othe
97 Mariner : Lemurs: I claim no such thing. I simply say that a business - any business, and that school is a business - makes money whatever way it can. We are li
98 Lufthansa : btw mariner, most US companies do not pay a divident because they don't have imputation credits, therefore, it isn't in most ppl's best interest to pa
99 Mariner : Lufthansa: Sorry, but a number of US companies do pay dividends, and a number of mutual funds regard this as a sign of the health of the company. Ford
100 Wukka : I respect your opinion, however, regardless of how intelligent the folks that made this decision are, it was a risk. You said so yourself. A risk is
101 Jetdeltamsy : they've made the company profitable. what does it matter how? hats off to southwest.
102 Lemurs : Now we're on the same page. If you look at my first post, you'll see that I'm mostly in agreement with you here. I think Southwest is a very well run
103 Mariner : Lufthansa: I don't think I am the one who has missed the point. The parallel with the oil wells was simply to illustrate that all forms of income are
104 Lufthansa : Firstly i just did a little cheaking and found the figures i recalled for jetblue were converted into Australian blue (they were actually a bank docum
105 Irishjohn : And what have we learned from all of these interesting .....eh......posts? Southwest is a company who is making a profit!!! Southwest has, along with
106 SWACLE : While I understand why you say WN is an "inferior product", I have to disagree due to the fact that WN does not fit the definition. As pointed out, a
107 Mariner : Lufthansa: No, it doesn't. JetBlue is still a very young airline, and consequently they have a much lower wages bill than a mature airline. As JetBlue
108 OPNLguy : I usually stay out of these types of threads because most seem to so easily stray into debating semantics, but I do have to comment on the above stat
109 DB777 : One thing I think about is the fact that if oil prices remain high or go higher we will see the demise of one or two, or more, legacy carriers before
110 Padcrasher : scott I ran the numbers from last Q. Accounting for profit sharing, accounting for taxes, accounting for 1x charges, and correcting for the gains from
111 ScottB : Padcrasher- I happen to believe that Continental is one of the better-run legacy carriers, but some folks seem to think that the concessions they aske
112 Padcrasher : Yes I know all about the "Southwest = John Paul II when it comes to pricing theory" They charge low prices to generate new business in the markets wh
113 Post contains images Lemurs : Again, I wouldn't debate that point outside of context. WN has a long legacy of being a well-run ship. My statements have been aimed at the recent hi
114 1MillionFlyer : You have no clue what you are talking about. What are you a pilot or something that just takes the check and blames "Management" for every thing? Wak
115 Incitatus : If that was the case, consumers would always migrate to "other airline" when confronted with the Southwest x "other airline" choice at similar prices
116 Incitatus : Padcrasher, that is not the way it works. The trader that sold Southwest a hedging contract should have eliminated any risk in the transaction as soo
117 Padcrasher : The point is, like all trades there are winners and losers. WN's gain was someone else's loss. These are not novices trading oil futures. These are pr
118 Wukka : You specifically stated that I was "absolutely WRONG!" with my comment. Now you throw up this very weak strawman? So the definition of "risk" and "ga
119 RogerThat : Not True in the U.S. of A, Lufthansa, thanks to George W. Bush. We're taxed only 15% on dividends. Reminder to all you price of oil Nostradomuses: In
120 ExFATboy : The dividend is paid out of the corporation's after-tax income, then the recipient pays income tax on it as well. That's where the "double tax" comes
121 RogerThat : Unless its a muni, the recipient is taxed at their marginal rate, which can be lots higher than 15%. Don't ask what my tax rate is, putting it off unt
122 EA CO AS : If that was the case, consumers would always migrate to "other airline" when confronted with the Southwest x "other airline" choice at similar prices.
123 Post contains links Indy : Good story about WN and their fuel costs. http://money.cnn.com/2005/04/14/news...fortune500/southwest_oil/index.htm "Southwest CEO Gary Kelly told inv
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