I agree, "technically" hedging is not gambling, you are not taking the money to the casino and placing it all on black. But, you are in fact betting that fuel prices will increase.

I do agree with the vast majority of what you said though. I even referenced "insurance" in my post.

In one sense, everything could be considered gambling. Hiring 100 new pilots is betting that you'll have enough flying for them to do. Scheduling a flight to leave at 0700 is betting enough people will get up early to fill it up. You get the idea…

Not hedging is betting that fuel prices will stay low. If the results of a spike in fuel prices would mean bankruptcy, then arguably not hedging is actually riskier than hedging.

Another way to think of hedging is to diversify an investment portfolio. You buy mix of stocks so that whatever happens you make money, or minimize losses. Being entirely in one sector is risky, but it sometimes pays off. Hedging, essentially, diversifies the airline. If fuel prices go up, you make money. If fuel prices go down, you make money. Of course, you won't make as much if fuel prices stay low as you would without hedging, but you wont lose as much if fuel prices spike. That's the tradeoff.

When people talk about SWA hedges they are referring to one block of hedges post 911. SWA benefited to the tune of about 5 billion dollars. It was the single greatest hedging move any airline has ever made. Since airline seats are a commodity any airline with more then about 10 percent market share in the US can in effect set pricing for everyone else.
SW made a decision to not use the hedges as excess profit but rather to use the hedges to maintain domestic US airline fares below the level that the legacy airlines could profit from and hopefully drive 1 or 2 of the major airlines out of business. In fact that statement was right from SWA leadership. UAL was target number 1.
We know that in the end the concept backfired on SW. The legacy airlines used the courts to restructure. The final result was much lower pilot wages and tremendous back sliding for most airlines. While SWA pilots were able to maintain the contract they signed after the big legacy contracts they have not been able to improve on it other then very small token wage increases over the last 10 years.
Today SWA is very much a legacy airline. They don't have the cost structure to take flying at will. They do have a really good workforce and smart management. They have however had to make a huge change in their business plan. Internal growth is now replaced with merging as the tool to expand. This is of course bad for existing SWA employees but reflects the realities of the industry now. Having been through 3 mergers I know they suck. The create all kinds of problems and never seem to work out as planned but they are the reality that virtually every airline management is using.
Look for another merger at SWA in the next 5 years and several other mergers coming soon. Not fun for anyone involved and I expect my airline will be front and center in the merger mania.

Hedging is insurance, not gambling.

Insurance is a gamble. Take car insurance. The insurance company is betting that you won't wreck your car, and you are betting that you will. If you don't wreck it, the insurance company wins because they get to keep the money you paid them, and if you do wreck it, you get paid. Sound like betting to me.

Well, that's true, but not buying car insurance is a gamble too. You are then self-insuring, with a high probability of a modest win and a small probability of a huge loss. By purchasing insurance, you are essentially "laying off" part of your exposure with a larger bookie.

"You take a chance getting up in the morning or putting your face in a fan!"

Let the purple plague begin. I personally will be avoiding the place because I am afraid of Tsquare.

The Oscar

Homie don't do ATL... Until the NWA merger, I had the unofficial record for fewest landings at Hartsfield.. only around 10 in 15 years... not too shabby.

I don't know if I will be able to beat you record, but we had ATL RON's on our lines in March and I eliminated those immediately. If it says LGA , BOS, EWR, ATL, or PHL on the line it will have to be a LONG RON or I probably won't even consider it.

Of course I will be doing ATL as a customer in a few months. We will see how that goes.

The Oscar