I'll say the exact same thing I've been saying for the last 6 Months.
Southwest will/did trail the industry in RASM improvement.
They will/did trail in CASM improvement.
The Hedging gains will subside.
The margin gap between the majors and lcc is quickly becoming a thing of the past.
They had a 3% net margin without the hedging gains. Compared to CO
's numbers coming up will be an almost meaningless difference.
Here's Jamie Baker Yesterday telling you exactly what I've been telling this board for the last 6 Months.
U.S. network carriers are "well on the way" to a cost structure
> will allow them to weather future market downturns, although fuel
> costs are masking the significant gains they are making when
> compared with low-cost carriers, JP
Morgan analyst Jamie Baker
> lawmakers yesterday.
> If it wasn't for fuel, "all [industry] gauges would be reading
> the green" for the first time since early 2001, Baker said during
> Senate aviation subcommittee hearing on the financial condition of
> airlines. The last time industry-wide costs excluding fuel were
> low was 1997, "and they are expected to head lower still," Baker
> said. Airfares and revenue are continuing to rise "with no
> offset on demand." Without fuel costs, American and Continental
> would have had just completed their most profitable second-
> ever, he said.
> At the same time, low-cost carriers are feeling more pressure, he
> said. Southwest has admitted that without its fuel hedges, it
> probably would not have been profitable this year. Southwest also
> must face the fact that its labor costs are now higher than the
> industry average, although reducing labor costs would be a very
> difficult proposition, Baker believes. Labor cost cuts will
> eventually be needed if Southwest wants to "remain competitive
with rapidly improving legacy carriers."
>> The industry is not suffering because some carriers are operating
> under bankruptcy protection, Government Accountability Office
> Director of Physical Infrastructure JayEtta Hecker told
> lawmakers. "Bankruptcies are endemic to the airline industry,"
> Hecker said, and there is no evidence that airlines in bankruptcy
> contribute to overcapacity or that they "harm competitors by
> reducing fares below what other airlines are charging." -AS