Every year, it’s the same story. Southwest Airlines (LUV) hedges against high oil prices and the other airlines bemoan that they should have done the same (some also go bankrupt).
Since 1999 Southwest has been aggresively hedging oil at a 70-80% clip a year. In fact, this year they hedged 70% of their fuel costs at $51/barrel. Oil currently sits around $125/barrel. So while American (AMR) charges $15 for each checked bag, Southwest is charging fares as a low as $29 while exclaiming on their website, “Bring your luggage!”
Many analysts see Southwest as the only airline likely to show a profit this year. Airline analyst Terry Trippler goes one step further and has a dire forecast for the end of 2008:
“[Southwest] may be the only one left standing.
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