thruthemurk

Are Airlines Going Bankrupt Again?

SWA fuel hedges are not responsible for 64 quarters of profitability. They are, however, a big part of the profitability in the last 7 or 8 years. Prior to that the Southwest employees worked for considerably less than their counterparts (50-70%). Combine this with a good management plan and the ability to bring a low cost model into markets not served by that model allowed an impressive cash flow. Now that their costs have risen ( and legacy costs have dramatically lowered) to closer to the legacy model, fuel hedges that succeed are necessary for SW continued profitablility.


On Jul 05 11:39 AM Tack wrote:

> To suggest that SWA's 64 consecutive quarters of operating profits
> were due solely to fuel hedges is rather facile. SWA runs an efficent
> operation, has motivated employees, and offers customers good value
> and, very importantly, the absence of punitive nonsense (change fees,
> bag fees, seat fees, etc.).
>
> Most other airlines operate as if customers have no alternative but
> to accept the costs, inconvenience and general nickle-and-diming
> that they rather arrogantly offer. In reality, many cutsomers have
> two options: 1) don't fly or 2) fly another friendlier carrier, like
> SWA.
>
> As in all business segments, the efficient and cutsomer-minded will
> propser, while others struggle or perish. Frankly, it's been rather
> amazing to me that the airline sector, generally, has been so incapable
> of recognizing this reality for so long.