Southwest Airlines earnings up

[Braque]

If you have looked into booking end of August-mid-September and have seen the price increases, this is an interesting article:

Thursday April 20, 8:58 AM EDT

NEW YORK (Reuters) - Southwest Airlines Co. (LUV) on Thursday barely eked out a quarterly profit gain as higher energy prices squeezed the discount carrier's costs despite having the industry's strongest fuel hedging position. Southwest, the No. 1 U.S. airline by market value, reaped a $133 million benefit from hedges that lock in fuel at below-market prices, without which the airline would have lost money in the quarter.

Even with the hedges, its jet fuel costs soared 63 percent in the period to $1.46 a gallon. That remains far below what its rivals, who are mostly unhedged, paid in the period. "They're wearing off, but anybody else would kill to have these fuel hedges," said Ray Neidl, an analyst at Calyon Securities.

Southwest said profit rose to $61 million, or 7 cents a share, compared with $59 million, or 7 cents a share, a year earlier. Excluding special items mostly related to accounting for derivatives and hedging, Southwest earned 8 cents a share, matching the average forecast from analysts polled by Reuters Estimates.

The first quarter result includes a $22 million, or 1 cent a share, charge for share-based compensation and the year-ago figures were retroactively adjusted to account for the same compensation. Operating revenue rose 21 percent to $2.02 billion on strong demand and a 5.4 percent increase in average fares.

"Thus far, strong load factor and revenue trends have continued in April, and customer bookings for the remainder of second quarter 2006 are strong," said Southwest Chief Executive Gary Kelly in a statement. For the rest of the year, over 70 percent of Southwest's fuel consumption is hedged at $36 a barrel. By 2009, only 30 percent will be hedged at $39 a barrel.

Southwest also said it had agreed with Boeing Co. (BA) to exercise 79 options for Boeing 737-700 aircraft in 2007 through 2012, bringing its total firm orders to 140. It still has another 116 options for additional planes.

©2005 Reuters Limited.

 

[Bo'sMom]

If you have looked into booking end of August-mid-September and have seen the price increases, this is an interesting article:

Thursday April 20, 8:58 AM EDT

NEW YORK (Reuters) - Southwest Airlines Co. (LUV) on Thursday barely eked out a quarterly profit gain as higher energy prices squeezed the discount carrier's costs despite having the industry's strongest fuel hedging position. Southwest, the No. 1 U.S. airline by market value, reaped a $133 million benefit from hedges that lock in fuel at below-market prices, without which the airline would have lost money in the quarter.

Even with the hedges, its jet fuel costs soared 63 percent in the period to $1.46 a gallon. That remains far below what its rivals, who are mostly unhedged, paid in the period. "They're wearing off, but anybody else would kill to have these fuel hedges," said Ray Neidl, an analyst at Calyon Securities.

Southwest said profit rose to $61 million, or 7 cents a share, compared with $59 million, or 7 cents a share, a year earlier. Excluding special items mostly related to accounting for derivatives and hedging, Southwest earned 8 cents a share, matching the average forecast from analysts polled by Reuters Estimates.

The first quarter result includes a $22 million, or 1 cent a share, charge for share-based compensation and the year-ago figures were retroactively adjusted to account for the same compensation. Operating revenue rose 21 percent to $2.02 billion on strong demand and a 5.4 percent increase in average fares.

"Thus far, strong load factor and revenue trends have continued in April, and customer bookings for the remainder of second quarter 2006 are strong," said Southwest Chief Executive Gary Kelly in a statement. For the rest of the year, over 70 percent of Southwest's fuel consumption is hedged at $36 a barrel. By 2009, only 30 percent will be hedged at $39 a barrel.

Southwest also said it had agreed with Boeing Co. (BA) to exercise 79 options for Boeing 737-700 aircraft in 2007 through 2012, bringing its total firm orders to 140. It still has another 116 options for additional planes.

©2005 Reuters Limited.

By the sounds of it, they will still be able to stay competitive within the airline industry and offer lower fares throughout the summer..something the other airlines may or may not be able to do. They were able to offer low summer fares last year when fuel prices were high as well. They are one smart company for hedging those gas prices. Fiscally they are probably the best run company in the industry.