associated with revised fuel hedges is being cited by Southwest Airlines for
the $162 million year-on-year dip in its net income to $48 million.
low-cost carrier today also says the arrest of alleged terrorists in London
this summer also depressed revenue in August and September by $40 million.
two problems were also noted yesterday by American Airlines.
notes that if its ‘mark-to-market’ fuel hedge revisions are discounted, it
recorded net incomes of $154 million in both 2005 and 2006 third quarters.
unit costs on an ‘economic’ basis increased 11% primarily due to higher jet
fuel prices,” says CEO Gary Kelly. “Even with a $200 million third quarter 2006
cash gain from our fuel hedging position, our jet fuel costs per gallon increased
over 60% from a year ago.
are 85% hedged (economic) for fourth quarter 2006, capped at an average
crude-equivalent price of approximately $43 per barrel.”
notes that with fuel, the airline’s third quarter unit costs dropped when
compared to the same time last year.
growth remains a key strategy for Southwest. In his statement, Kelly notes: “We
have a number of developing and growing markets, and we are excited about our
future growth opportunities. We have been actively exploring the used aircraft
market for additional 2006 aircraft and acquired one [Boeing] 737-700 during
[the] third quarter.
we have signed an agreement to acquire another previously owned 737-700
aircraft, which will bring our total aircraft additions to 36 for this year. We
also recently accelerated two 737-700 deliveries from 2008 to 2007, bringing
our 2007 firm orders to 37.”
adds: “We exercised one 737-700 option for 2008 delivery, bringing our 2008
firm orders and options to 29 and five, respectively.”
week Southwest announced a new expanded scheduled for its Dallas Love Field
base, precipitated by a new law governing the airport’s operations. That alone
should generate more than $50 million in annual revenue for Southwest, says
third quarter revenue rose 17.7% year-on-year to $2.34 billion, while operating
expenses increased 19.5% to $2.08 billion. Operating income grew 5.2% to $261