THE BEST TRADER IN THE BUSINESS: Southwest Airlines Aggressively Hedging Against Fuel Costs
Southwest hedged more than 70% of its fuel needs this year at relatively low cost which helped the airline remain profitable, explains CEO Gary Kelly. We’ve been hedging for decades and we’re prepared for difficult times, he adds. Next year we’re about 55% hedged at $51 a barrel and we’ve got a decent position started for 2010 through 2012. But no one can predict what energy prices will be. It’s an insurance program and it’s helping see us through. And that’s just one component (of our business model), Kelly adds. We continue to have the lower-fare advantage and that’s huge. Low-fares attract more business. (Consequently) we’re able to grow when everyone else is shrinking.Traders what do you think?Gary Kelly is a great CEO and I think Southwest is best of breed but I just can’t recommend this stock, says Jeff Macke. Right now airlines are trading vehicles, adds Guy Adami. Play the volatile ones not Southwest. To view Southwest’s CEO Gary Kelly’s Interview on Fast Money, visit:
http://www.cnbc.com/id/24858373 (scroll to the bottom of the page for the video player)
