i love reading the BS Stories of how the Airline industry is struggling

Brock Landers · Jun 24, 2008

These fucking bullshit artists are HEAVILY into the futures markets on enegery contracts! Just like farmers hedge their corn with futures contracts, Airlines hedge the cost of fuel with futures contracts...as it costs more to buy fuel due to the price going up, they make they back with increased value of their futures contract positions. Hedging is one of the older business models for ANY business dealign with uncertainty and price fluctuations, its the EXACT reason the market is setup the way it is to begin with!!

So next time you read how the airlines are going to go broke, take it all with a grain of salt, they locked in their fuel price LONG ago... They are total bullshit artists, and the media is so misinformed its sick.

nhoj · Jun 24, 2008

Southwest has lock in to $2.99 feul for the next 5 years I read. Funny thing is they are the only airline that has made a profit and to my knowledge they haven't had to be bailed out by the government. Farmers and Airlines are the biggest crock around as i have said many time before.

ParanoidAndroid · Jun 24, 2008

nhoj said:
Southwest has lock in to $2.99 feul for the next 5 years I read. Funny thing is they are the only airline that has made a profit and to my knowledge they haven't had to be bailed out by the government. Farmers and Airlines are the biggest crock around as i have said many time before.

Yeah, but have you seen SWA prices recently? It's hard to consider them the "low cost" airline anymore. I priced out LAX to Chicago, trip is almost 4 weeks away and the prices are OUTRAGEOUS! The best I could get was $570 traveling during undesirable times. If I wanted better times, the ticket would have easily cost over $800. They're a great airline, still solid service, but their prices are NOT what they used to be.

RobFunk · Jun 24, 2008

ParanoidAndroid said:
Yeah, but have you seen SWA prices recently? It's hard to consider them the "low cost" airline anymore. I priced out LAX to Chicago, trip is almost 4 weeks away and the prices are OUTRAGEOUS! The best I could get was $570 traveling during undesirable times. If I wanted better times, the ticket would have easily cost over $800. They're a great airline, still solid service, but their prices are NOT what they used to be.

I saw that too. SWA prices are outrageous compared to what they were a yr or 2 ago. There arent even as many ticket options on their site anymore.

Theyre making it off their brand name they have so carefully crafted over the years.

Brock Landers · Jun 24, 2008

they use the situation to their advantage to mark up prices. They cry foul about the cost of fuel, when its damn well a fact they locked in a low price on that a while ago. When it rises, they get that back in a return on the higher value of their futures contract

fhmesq44 · Jun 24, 2008

Looked into flights to Vegas earlier this week (from Oak or SJC) and SWA was $320. Sadly it was still the cheapest direct flight.

PA, look into buying a rapid rewards coupon on ebay or craigslist, you can still get them for ~$300-320 and that should get you to Chicago for that price.

quantumleap · Jun 24, 2008

Ask any financial advisor and you will hear that most airlines are set up on bad business models. So they run their companies into the ground and we bail them out.

Bad companies should die if they can't run a decent business. The good companies like Southwest will take up the flights that are left.

WorldNumberOne · Jun 24, 2008

i just put my 12 year old daughter on a flight this morning . orlando to knoxville to visit some family friends for 2 weeks.

delta was the only airline that went straight there.

flight was around 525 bucks . luckily i used air miles . good thing , cause they banged me for 100 bucks each way for unaccompanied minor and another 25 bucks for a second checked bag.

still cost me 225 for a flight that took 1.5 hours.

nhoj · Jun 24, 2008

SWA prices have gone up alot but most of the time if you puchase 21-30 days out you still can't beat them and I have never had a problem with lost luggage with them as I have many times with other. ALso they seem to be on time more offen than not but I think they work that in to there fly time so they look good. For example of increase in fare I used to fly round trip to New Orleans from Houston for around $105 now I book a flight and it is $147.50. But still cheaper than driving plus I get there in 45 mins. where if I drove it would be 6 hours.
I did book 2 tickets on Delta for $517 to Michigan round trip with one stop each way. Compared to non stop $896. I will stop to save almost $400 for sure.

RobFunk · Jun 24, 2008

NHOJ, true. IN SWA's defense they are still going to have the best deal most of the time. It's still suprising to see the big price spikes though!

jambolaya1 · Jun 24, 2008

People really get on my case when i call some one stupid or an idiot during some of these debates. Well, i have examined this tactic and i have figured that i was wrong to refer to them a stupid or idiots.

I should have been calling most of them complete brain f@#ked saliva drooling troglodytes. (my apologies to troglodytes every where in the world)

So you see one story about one Airline that bought fuel futures and this is probably the only Airline in the whole country surviving so you figure.."Hmm let me go post on a public forum that Airlines are doing ok because they hedge"

REally how in the hell was the idea to post such an incredibly ill informed idea on a public forum no less, formed in your head?

There are so many idiot proof resources over the internet that could have helped show you the stupidity of your comments, but you cant even choose to at least even to the laziest kind of research, go to google and type in "Airlines going out of business". This is something even the dumbest internet user can do.

Did you try this? Obviously not.

Obviously in your world where idiocy reigns supreme it makes sense that Airlines like ATA, Spirit, ALoha,Skyway, Skybus etc that have gone out of business were probably drowning in profits from fuel hedges. They simply made too much cash hedging the figured they should shut down the business fire all their employees and go spend their oil futures profits.

Northwest Airlines to reduce capacity yet again [SIZE=-1]Minneapolis Star Tribune[/SIZE]
United to cut 950 pilots Silicon Valley / San Jose Business Journal
Northwest Airlines to reduce capacity yet again
United Airlines to reinstate minimum-stay rule
[SIZE=-1]Los Angeles Times, CA - Jun 21, 2008[/SIZE]
[SIZE=-1][/SIZE]
[SIZE=-1]All these airlines in the opinion of this genius are taking these [/SIZE]
[SIZE=-1]drastic measures because apparently they are un aware of the massive[/SIZE]
[SIZE=-1]profits they have made in the fuel hedging business.[/SIZE]
[SIZE=-1][/SIZE]
[SIZE=-1]And what is sadder yet, is the flock of even dumber idiots who[/SIZE]
[SIZE=-1]post remarks in agreeance of such outrageous active ignorance![/SIZE]
[SIZE=-1][/SIZE]
[SIZE=-1]goodness what is this freakin world coming to???

hno:

hno:[/SIZE]

Objection · Jun 24, 2008

Here are Southwest's fuel hedges
2008 is 65% at $49/barrel; 2009 is over 50% hedged at $51/barrel; 2010 is over 25% hedged at $63/barrel; 2011 is over 15% hedged at $64/barrel; 2012 is 15% at $63/barrel.

If legacy carriers start going under, what do you think Southwest is going to do?
Not lower fares LOL

Airlines are operating on razor thin margins and now it costs less to park many planes as opposed to flying them.

A 737 burns about 800 gallons of fuel per hour. That's a general number with obvious variables not factored in.

TTinCO · Jun 24, 2008

Even hedged at $50-60 a barrel, most if not all airlines are screwing the pooch.

Don't forget how many of these airlines were going tits

up(some repeatedly) when oil was much much cheaper.

Objection · Jun 24, 2008

Today Scott Kirby, President of USAir, was quoted as saying that the cost of fuel alone to haul a US Airways passenger on a typical flight is $299.

People who want to fly from NY to Vegas for $99 each way....do the math.

nhoj · Jun 24, 2008

Whats the difference if a airline makes money or not? The govenment will bail them out. That is what this thread was started about in the 1st place. Why don't you try goggleing airlines that make a porfit you will find that SWA is one of the few airline to do so.

TTinCO · Jun 24, 2008

nhoj said:
Whats the difference if a airline makes money or not? The govenment will bail them out.

Very true

Objection · Jun 24, 2008

Other airlines were turning profits till oil shot up

Brock Landers · Jun 24, 2008

you guys are missing the point, with Future's hedging, they have the price of oil LOCKED IN, no matter if its 135 bux a barrel or 400.

TTinCO · Jun 24, 2008

Brock Landers said:
you guys are missing the point, with Future's hedging, they have the price of oil LOCKED IN, no matter if its 135 bux a barrel or 400.

So what. If they could barely stay alive at $30 a barrel, they are going to lose their ass at $50 a barrel until airfare prices rise enough.

jambolaya1 · Jun 24, 2008

Brock Landers said:
you guys are missing the point, with Future's hedging, they have the price of oil LOCKED IN, no matter if its 135 bux a barrel or 400.

Again with this rubbish!!! Do yourself a favor and go back to high school learn how to read then you can educate yourself on Futures.

Some one please tell this bozo that Futures contracts do not live to eternity.

There is typically a time when the contracts will expire and the. Airlines that were already deep in the red and taking goverment handouts could not afford multiple long term futures contracts that would still be open today.

So guy shut the hell up , go learn something about futures then come back and apologize for making every one who read this nonsense dumber by sunset today.