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WN Post 2Q Profit, Announces Buyouts  
User currently offlineTyphaerion From United States of America, joined Jun 2005, 619 posts, RR: 4
Posted (5 years 3 months 3 days ago) and read 5809 times:
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From the AP: Southwest Airlines posts 2Q profit

$54 million last quarter. Are planning on 1400 voluntary buyouts to the tune of $40 million this year and $30 million next year. We shall see how effective this is.

Congrats to all WN employees. It wasnt a smooth flight last quater, but you pulled it off anyway. Nicely done.

[Edited 2009-07-21 06:38:14]


For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
38 replies: All unread, showing first 25:
 
User currently offlineLipeGIG From Brazil, joined May 2005, 11442 posts, RR: 58
Reply 1, posted (5 years 3 months 3 days ago) and read 5738 times:
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Quoting Typhaerion (Thread starter):
$54 million last quarter. Are planning on 1400 voluntary buyouts to the tune of $30 million this year and $20 million next year. We shall see how effective this is.

Amazing how VN manages to get profits and the legacies can't do !

They (VN) for sure are on the right track.

Congrats!!!!



New York + Rio de Janeiro = One of the best combinations !
User currently offlineTyphaerion From United States of America, joined Jun 2005, 619 posts, RR: 4
Reply 2, posted (5 years 3 months 3 days ago) and read 5668 times:
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I find two things funny, and I wanted to post the thread in a separate post because this will be borderline.

The press is great at dressing a story. WN posts their first profit in three quarters and here are the headlines:

"Continental, Southwest Will Trim Workforce as Travel Slumps"
"Southwest Air Net Falls 83%, Says 1400 Workers Take Buyouts"
"Southwest 2Q Profit Plunges 83% On Hedging But EPS In Line"

It seems the press always needs to find a way to dress the truth up negatively. *Sigh*

This is why I only quote the AP. I get much less (not none, but significantly reduced) spin for my time.



For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
User currently offlineMidEx717 From United States of America, joined May 2002, 132 posts, RR: 1
Reply 3, posted (5 years 3 months 2 days 23 hours ago) and read 5613 times:

Shouldn't it be WN not VN.

User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6625 posts, RR: 24
Reply 4, posted (5 years 3 months 2 days 23 hours ago) and read 5446 times:



Quoting Typhaerion (Reply 2):
The press is great at dressing a story. WN posts their first profit in three quarters and here are the headlines:

I don't think its spin as much as it is accurate comparisons to the 2nd quarter of 2008. Whatever WN did in the previous few quarters isn't relative as you don't compare 2nd quarter to first (or 4th or 3rd). Compared with 2nd quarter last year, WN's numbers took a dive and that's a fact.


User currently offlineTyphaerion From United States of America, joined Jun 2005, 619 posts, RR: 4
Reply 5, posted (5 years 3 months 2 days 23 hours ago) and read 5397 times:
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I do understand the year-over-year comparison, but frankly at this time and in this economy, the quarter-to-quarter comparison is a better metric. Personal opinion, but with things the way they are, I would bet that the fact that they made any profit at all would be more important headline.

I would be interested to see the operational profit figures for that last 6-8 quarters to see how they are behaving. I should do some digging when I get the chance.



For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6625 posts, RR: 24
Reply 6, posted (5 years 3 months 2 days 22 hours ago) and read 5307 times:



Quoting Typhaerion (Reply 5):
I do understand the year-over-year comparison, but frankly at this time and in this economy, the quarter-to-quarter comparison is a better metric.

But it isn't a better metric as almost every carrier will do better in the 2nd quarter versus the 1st.

Quoting Typhaerion (Reply 5):
I would bet that the fact that they made any profit at all would be more important headline.

Maybe, though I believe virtually all the LCC's will post a profit this quarter. In fact, margin wise, I would guess most of the other LCC's will outperform WN.


User currently offlineHestaman From United States of America, joined Jun 2008, 89 posts, RR: 0
Reply 7, posted (5 years 3 months 2 days 22 hours ago) and read 5265 times:

I think the reason they are posting a profit is because they are charging bag fees which boosts their bottom line and doesn't drive away customers. Oh, wait...

User currently offlineTyphaerion From United States of America, joined Jun 2005, 619 posts, RR: 4
Reply 8, posted (5 years 3 months 2 days 22 hours ago) and read 5194 times:
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Quoting FlyPNS1 (Reply 6):
Maybe, though I believe virtually all the LCC's will post a profit this quarter. In fact, margin wise, I would guess most of the other LCC's will outperform WN.

I would be interested to see that. I assume that by "other LCCs" you are referring to:

1.) AirTran
2.) Spirit
3.) Allegiant
4.) USA 3000 (maybe)

Have I missed any? Frontier, possibly...

Again, I might be biased, but I am tired of negative dressing. And it isnt just WN they do it to. They do it to everyone.



For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
User currently offlinePar13del From Bahamas, joined Dec 2005, 7377 posts, RR: 8
Reply 9, posted (5 years 3 months 2 days 21 hours ago) and read 5112 times:



Quoting Hestaman (Reply 7):
I think the reason they are posting a profit is because they are charging bag fees which boosts their bottom line and doesn't drive away customers. Oh, wait...

Oh, wait is correct, its the fact that pets are now allowed to travel for a fee that made them profitable  Smile

Cheers


User currently offlineSunking737 From United States of America, joined Feb 2005, 2054 posts, RR: 9
Reply 10, posted (5 years 3 months 2 days 21 hours ago) and read 5086 times:



Quoting Typhaerion (Reply 8):
I would be interested to see that. I assume that by "other LCCs" you are referring to:

1.) AirTran
2.) Spirit
3.) Allegiant
4.) USA 3000 (maybe)

Have I missed any? Frontier, possibly...

Sun Country is privately held but was expected to be profitable also.



Just an MSPAVGEEK
User currently offlineTugger From United States of America, joined Apr 2006, 5672 posts, RR: 10
Reply 11, posted (5 years 3 months 2 days 21 hours ago) and read 5011 times:



Quoting Typhaerion (Thread starter):
Are planning on 1400 voluntary buyouts to the tune of $40 million this year and $30 million next year. We shall see how effective this is.

What I read is that they aren't "planning" on it, but that 1,400 employees have already accepted:
http://www.businessweek.com/ap/financialnews/D99IRV300.htm

Quote:
Southwest is also cutting its work force, and it announced that 1,400 employees -- about 4 percent of its employees -- had accepted early-out offers of cash and travel benefits.

Am I misreading it?

Also I was wondering what the make up of the 1,400 are (number of pilots, F/A's, etc.).

Quoting Typhaerion (Reply 2):
It seems the press always needs to find a way to dress the truth up negatively. *Sigh*

Well the article I quoted above had this headline: Southwest Airlines posts 2Q profit
So not everyone is doom and gloom.

Tugg



I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
User currently offlinePITops From United States of America, joined May 2007, 1442 posts, RR: 4
Reply 12, posted (5 years 3 months 2 days 21 hours ago) and read 4975 times:



Quoting Par13del (Reply 9):
Oh, wait is correct, its the fact that pets are now allowed to travel for a fee that made them profitable

Alot of people are taking advantage of this too. We have at least one pet on every flight in PIT.

And I would rather see WN offering buyouts then laying people off.



Ground Ops, Southwest Airlines, CMH
User currently offlineWestWing From United States of America, joined Feb 2005, 2134 posts, RR: 7
Reply 13, posted (5 years 3 months 2 days 21 hours ago) and read 4952 times:

Quoting Hestaman (Reply 7):
I think the reason they are posting a profit is because they are charging bag fees which boosts their bottom line and doesn't drive away customers. Oh, wait...

You forgot the revenue WN derive from fees for reservations-by-phone and from fees for ticket-changes.

(Minor edit to correct grammar)

[Edited 2009-07-21 09:59:37]


The best time to plant a tree is 40 years ago. The second best time is today.
User currently offlineIowaman From United States of America, joined May 2004, 4416 posts, RR: 6
Reply 14, posted (5 years 3 months 2 days 20 hours ago) and read 4872 times:
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FORUM MODERATOR

Also, the fuel hedges were hurting WN, and to still turn a profit is pretty darn good news.

User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6625 posts, RR: 24
Reply 15, posted (5 years 3 months 2 days 20 hours ago) and read 4848 times:



Quoting Typhaerion (Reply 8):
I would be interested to see that. I assume that by "other LCCs" you are referring to:

1.) AirTran
2.) Spirit
3.) Allegiant
4.) USA 3000 (maybe)

Yes, Frontier and JetBlue.


User currently offlineTyphaerion From United States of America, joined Jun 2005, 619 posts, RR: 4
Reply 16, posted (5 years 3 months 2 days 19 hours ago) and read 4717 times:
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jetBlue, knew I forgot one. Does Frontier even really count these days, given that they are now a wholly owned subsidiary of Republic?


For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
User currently offlineFXramper From United States of America, joined Dec 2005, 7308 posts, RR: 85
Reply 17, posted (5 years 3 months 2 days 19 hours ago) and read 4691 times:
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Quoting Iowaman (Reply 14):
fuel hedges were hurting WN,

If they hedged it when it was $140 a barrel it's still hurting them.



I miss the old Anet.
User currently offlineTugger From United States of America, joined Apr 2006, 5672 posts, RR: 10
Reply 18, posted (5 years 3 months 2 days 19 hours ago) and read 4655 times:



Quoting FXramper (Reply 17):
Quoting Iowaman (Reply 14):
fuel hedges were hurting WN,

If they hedged it when it was $140 a barrel it's still hurting them.

From what I understand they have unwound *most* of the upside down hedges but still are working on them:

Quote:
Second-quarter fuel costs fell 23% to $1.79 a gallon. Southwest said it has hedged 30% of its estimated third-quarter fuel needs. The company expects per-gallon costs of about $2.15 for the third quarter.

Southwest had locked in more than 60% of its 2009 fuel needs at prices now on the wrong side of market rates, and had spent time in recent months annulling those contracts.

http://online.wsj.com/article/BT-CO-20090721-705969.html

Tugg



I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6625 posts, RR: 24
Reply 19, posted (5 years 3 months 2 days 16 hours ago) and read 4395 times:



Quoting Typhaerion (Reply 16):
jetBlue, knew I forgot one. Does Frontier even really count these days, given that they are now a wholly owned subsidiary of Republic?

For the purposes of 2nd quarter 2009, I would still say Frontier counts since they weren't a subsidiary of Republic during that time. Going forward, this will probably change and it will be be harder to evaluate once they are under the Republic umbrella.

I might also note that WN reported that they are unsure if they will be profitable in the 3rd quarter. That's a bit disturbing given that the 3rd quarter is usually the second strongest quarter (behind the 2nd quarter).


User currently offlineTyphaerion From United States of America, joined Jun 2005, 619 posts, RR: 4
Reply 20, posted (5 years 3 months 2 days 16 hours ago) and read 4383 times:
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Quoting FlyPNS1 (Reply 19):
WN reported that they are unsure if they will be profitable in the 3rd quarter.

I saw that too. Industry comparison will bear out how WN is handling the rough patch. However, 3Q 2009 is going to be tough on everyone. Oil is climbing and passengers are still not flying. It may not be at an all time low, but it is down. And Premium passengers are down more still.

Again, anxious to see how the other LCCs are doing both for 2Q and 3Q.



For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
User currently offlineMariner From New Zealand, joined Nov 2001, 25409 posts, RR: 86
Reply 21, posted (5 years 3 months 2 days 16 hours ago) and read 4374 times:
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Quoting Typhaerion (Reply 16):
Does Frontier even really count these days, given that they are now a wholly owned subsidiary of Republic?

Whoa. Frontier is not - yet - a wholly owned subsidiary of Republic.

They may become so in two or three weeks, but nothing is certain until it happens.

mariner



aeternum nauta
User currently offlineCommavia From United States of America, joined Apr 2005, 11752 posts, RR: 62
Reply 22, posted (5 years 3 months 2 days 15 hours ago) and read 4307 times:

Based on the airlines that have reported thus far, I would not exactly be popping champagne corks over at Southwest - and I know they're not. Southwest did post a net profit for the quarter, which is good, but on balance, as I and many others have long contended, cash flow is just as valuable if not more valuable a metric as net profit - which is a paper number derived from accounting rules, estimates and non-cash activities.

In terms of operating cash flows for the quarter, Southwest's performance is the most mediocre of all the carriers to report thus far.

In Q2, Southwest generated only $135M in cash flow - less than any of the network carriers to thus far report.

On a unit basis, the numbers are also quite striking. Southwest actually generated $5.95 per passenger, or about 0.69 cents per RPM or 0.52 cents per ASM. By contrast, all three of the network carriers to report thus far all generated at least three times as much operating cash flow per passenger and substantially (more than double) the cash on a unit basis.

I'm certainly not saying that the situation at Southwest is dire. No, they're not filing for bankruptcy anytime soon, or going anywhere tomorrow, but I think these numbers do reflect the challenge that Southwest continues to face as it tries to fundamentally change its business model and compete in an environment where they are increasingly exposed to what the rest of the industry is paying for fuel.

Southwest is very smart to be pushing a buy-out. They have lots of cash right now and buying out more senior, costlier employees to permanently lower labor costs is a very smart use of resources right now, in my opinion.


User currently offlinePar13del From Bahamas, joined Dec 2005, 7377 posts, RR: 8
Reply 23, posted (5 years 3 months 2 days 14 hours ago) and read 4255 times:



Quoting Commavia (Reply 22):
I'm certainly not saying that the situation at Southwest is dire. No, they're not filing for bankruptcy anytime soon, or going anywhere tomorrow, but I think these numbers do reflect the challenge that Southwest continues to face as it tries to fundamentally change its business model and compete in an environment where they are increasingly exposed to what the rest of the industry is paying for fuel.

What should be remembered is that WN and AA are operating in the same environment which is different from the other carriers who reduced their cost via Chpt.11, fuel prices are only one part of the cost competitive nature that the other carriers now have.
Unless WN and AA take advantage of Chpt.11 they will have to continue to find creative ways to lower cost. Even though the laws have changed, it has simply empowered the bean counters to find more creative ways to show cost / expenses out of control.


User currently offlineAtrude777 From United States of America, joined Aug 2003, 5694 posts, RR: 52
Reply 24, posted (5 years 3 months 2 days 14 hours ago) and read 4225 times:



Quoting Commavia (Reply 22):

Southwest is very smart to be pushing a buy-out. They have lots of cash right now and buying out more senior, costlier employees to permanently lower labor costs is a very smart use of resources right now, in my opinion.

The question is how many of those who took the buyouts WERE Senior folks?

i was eligible for the buyout and I had 2 yrs employment at WN. Every single WN Employee was eligible for it, with a minimum of one year of employment there.

For WN's benefit yes, we should hope the senior folks took them, however WN offered it to every single employee.

The last buyout was actually an early retirement done in I think late 2007? Where it was offered to those at WN 10 yrs or more.

Alex



Good things come to those who wait, better things come to those who go AFTER it!
25 FlyPNS1 : Agreed. Although on top of that, WN should probably be getting reducing employees just to stay efficient. If you look at the numbers compared to 2Q20
26 Commavia : The only real way that other airlines have benefited where AA, Continental and Southwest have not in the last few years from bankruptcy is from forci
27 Post contains links Typhaerion : Well, this answer's the AirTran question: AirTran Posts Profit FL did $78.4M on $603.7M versus WN at $54M on $2.62B. Large difference in margin there,
28 Lightsaber : Good news for WN! I know of six customers (amoung close friends) that WN gained by allowing pets to travel. So much for WN only makes a profit due to
29 FlyPNS1 : And if you want to add in Allegiant, they had a net income of $23.9M on $143M, so a margin of 16.1%.
30 MtnWest1979 : Well, I for one, took the buyout. Gone in 9 days....
31 PITops : I'm hoping for some movement so I can transfer to CMH.
32 Atrude777 : Someone above me took the buyout in STL so I hope to move up if I return in Spring of 2010. *crosses fingers* Alex
33 MtnWest1979 : [ Well I wish you luck in that. Probably need many to leave a locale before they'll replace anyone.
34 Post contains links Typhaerion : Lets add jetBlue stats to this list: JetBlue posts 2Q profit jetBlue made $20M on $807M for a margin of 2.47%. So far that gives us: 1.) Southwest - 2
35 Sunking737 : $58 million 2Q.
36 Typhaerion : More importantly, $58M on $2.66B giving them a margin of 2.18%. This gives us the following: 1.) Southwest - 2.06% Profit Margin 2.) AirTran - 12.98%
37 Tugger : So the outliers are Air Tran and Allegiant. What made them so different this quarter? Not that it's a bad thing, just curious as to the "why". Tugg
38 Rampart : Results are pre RAH. But yes, as a potential profit-making entity for RAH, they'll count. It'll be harder to uncover separates, though. Sincerely, be
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