The AirTran Pilots' Windfall and SLI

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01-21-2011, 05:50 AM

#481

shoelu

Gets Weekends Off

Joined APC: Jun 2007

Position: CA

Posts: 1,207

Quote:

Originally Posted by Fishfreighter

I guess the SWA boys forget that SWA hasn't made any money on airline ops for several years. Their profits are based on historical fuel hedges. Read the 8k and 10k SEC reports. That's why they are buying AAI, as others have pointed out. Entry into new markets without having to "do it yourself." Instantly becoming the 2nd dominant carrier in ATL says SWA management recognizes the value of external vs. internal growth.

These statements are not exactly correct. Southwest has made profits for 38 consecutive years. If you would like to look at the last several years, Southwest is making more profit with less fuel hedging. Southwest hedged approximately 70% in 2009, and 40% in 2010. Excluding special items for both years, full year 2010 net income was $550 million compared to $143 million for full year 2009. If you are talking about historical profits going back to 1999-2008 fuel hedging saved around 3.5 BILLION. A pretty savvy business maneuver in my opinion. Southwest did not invent hedging, but they did have enough liquidity and foresight to use it when it was needed most. Other airlines chose a different route.

Southwest has made many forward thinking business decisions over the years which has kept them consistently in the black. I for one feel this acquisition is one of them. It does set us up for future growth, I guess where I may differ in opinions from some of the detractors is I believe Southwest has a strategy that would have kept us profitable with or without this acquisition.

In the grand scheme of things, no one asked me my opinion. I of course would have preferred internal growth, but am certainly not blind to the fact that this acquisition is a very smart move for Southwest. Just as I didn't ask for this I can understand that AirTran pilots also were not consulted prior to a deal being made. In the end we will be combined and I am quite sure both groups will share the pain. This will not be a culture crushing event but most definitely a speed bump in the road. In the end, hopefully everyone's carreers will be enhanced.

Last edited by shoelu; 01-21-2011 at 08:06 AM. Reason: Spelling

01-21-2011, 06:17 AM

#482

Fishfreighter

Banned

Joined APC: Sep 2007

Posts: 1,480

Quote:

Originally Posted by shoelu

Southwest has made many forward thinking business decisions over the years which has kept them consistently in the black. I for one feel this acquisition is one of them.

Exactly what I was trying to say. You said it better. My hedging example referred to past hedging with this merger as the current strategy to maximize profits.

01-21-2011, 06:56 AM

#483

Ferd149

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Joined APC: Apr 2008

Position: LAX ERA

Posts: 3,457

Quote:

Originally Posted by 1Seat 1Engine

Read'em yourself again. You're wrong and that's all there is to it.

Record revenue for the last couple quarters and net profit from continueing operations all in the black for as far back as you care to look.

While I'm sure what you say is true..............I'll just pass along a story.

I was complaining about something one night and used the fact that my airline was making an operational profit to back my argument.

My Capt, gave me with a foul look and said, "When I was at Eastern we made an operational profit every quarter till they closed the doors".

I never did any research to know if he was exactly right, but I think his point is well taken when discussing only an operational profit.

Ferd <----------back to my popcorn - this thread is like a NASCAR race, ya watch it for the crashes

01-21-2011, 06:57 AM

#484

MaxPowers

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Joined APC: Oct 2010

Posts: 127

Quote:

Originally Posted by shoelu

In the grand scheme of things, no one asked me my opinion. I of course would have preferred internal growth, but am certainly not blind to the fact that is acquisition is a very smart move for Southwest. Just as I didn't ask for this I can understand that AirTran pilots also were not consulted prior to a deal being made. In the end we will be combined and I am quite sure both groups will share the pain. This will not be a culture crushing event but most definitely a speed bump in the road. In the end, hopefully everyone's careers will be enhanced.

After forty-nine pages, we finally have a winner. Well done.

01-21-2011, 09:03 AM

#485

mulcher

gets time off

Joined APC: Apr 2007

Posts: 1,249

Quote:

Originally Posted by alfaromeo

Okay, rich boy,Dont know what that means but my family does pretty well. why don't you tell me why Gary Kelly is buying Airtran?I think thats an obivious answer...maybe you should research it a little. Why did he try to buy Frontier Been beat to death a thousand times already. Do your research poor little man.? Bored, restless? Why don't you go back and listen to the last two years worth of investors and earnings conference calls made by YOUR MANAGEMENT. They are saying the same thing. Southwest can't survive in its present format forever. Slowly your costs are rising to be equal to major carriers, you have tapped out all the Baltimores and Providences that there are in the country.

Maybe if you dialed down your testosterone Non here. You are the one spouting of at the mouth making a fool of yourself. and did a little industry research, you wouldn't make such ridiculous statements. Everyone knows that Southwest has to adapt LONG TERM. I did not say that Southwest is about to go out of business, but if they don't adapt, eventually they will. Every company has to adapt. Business 101, learned me some of that in college. Not exactly a new concept. They went head to head with Delta in Salt Lake and got pushed around, now their operation is half the size it was a couple of years ago.

Southwest needs access to high volume business markets like LGA and DCA and the assets that AAI has are extremely difficult to get. Look at all the things your airline is doing to attract high fare business travelers. Why are they doing that? Nothing to do on Saturday? At $100 a barrel they have a hard time making money hauling Ma and Pa and the kids down to Disney World. Yep 38 years and still screwing it up.

So have you ever turned off your reality TV and done any research into your industry? We watch very little TV. I like to spend time with my family. It might help you stop making a public fool of yourself. Snooki doesn't understand our industry. If you don't believe me, why don't you listen to your own CEO. Or does he need intervention also? No, just you. Now go dial the clear skies number.

This place is getting as bad as FI. Amazing how some know everything. Why does he fly airplanes for a living? Now back to how good or bad or who cares about the SWA/AAi SLI.