Southwest Airlines experiences soft third quarter
Oct. 20, 2011, Dallas, Tx. - Southwest Airlines is reporting a loss for the third-quarter because its fuel-hedging bets turned sour when the price of oil dropped over the summer.
Southwest says it lost $140 million, compared with net income of $205 million a year earlier.
Hedging is like insurance against a spike in oil prices, but Southwest's hedges lost value as crude prices fell by one-fifth during the third quarter.
Excluding the hedging losses and other one-time expenses, Southwest would have earned $122 million, or 15 cents per share — still below last year's results, but a penny better than analysts expected.
With the addition of AirTran, revenue rose 35 per cent to $4.31 billion.