Tuesday, October 26

Southwest doesn't fear oil prices? No kidding Wendy

At Southwest, No Fear of Fueling

i find this article very amusing... what did Wendy Zellner (the author of this article and Dallas bureau chief of "business week") just realize that SWA was hedging fuel... it's been a know fact for the last five years, and no one else in the industry wanted to do it because at the time SWA was buying at or slightly above the market price...

well dang, the "big" boys go broke and now they can't buy hedges... i really feel sorry for them... here's what SWA's been able to do so far...

already has hedged more than 80% of its fuel needs for next year with prices capped at the equivalent of $25 per barrel of crude, 60% in 2006 at $31 a barrel, and over 40% in 2007 at $30 a barrel. That's far below where the market is betting that oil prices will be.

and their competitor American Airlines in terms of hedging is only...
4% hedged in the fourth quarter at $30 a barrel and is virtually unhedged for 2005 -- much like most of the legacy carriers.
i sorta feel sorry for the dying airlines but not really... how long does it take to look around at what your competition is doing and adopting similar strategies if your competitor is beating the crap out of you day in and day out???

back to the amusing part... does Wendy know this was happening before the past few months or did she get a hot tip from a player at SWA... come on Wendy... just tell us if you are pumping the stock for your or someone else's gain!!!


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