While overall performance of the company has improved significantly since the retraction of the expansion plans, it appears that some due diligence is required to examine the fuel hedges in place. Clearly prior performance was driven in some part by the savings of the fuel hedges, however that is because the crude oil price rose so dramitically from substantially lower levels. The offset to the fuel hedge contract appears to be generating losses. If these losses continue due to a reasonably stable oil value then hopefully these costs have been considered into the operating budget numbers for the remainder of 2010.
Regards
Glen R. DeCosta
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S & P as a rating agency should not be given much credibility given their fine performance with the bank stocks and AIG. Southwest fuel costs are hedged until 2012 in case S& P doesn't know or understand that and the presssure of declisning economic activity will only accelerate the number of travelers who will utilize the low cost structure of Southwest Airlines.
Is it possible that the cabal of Rating agencies and compnaies that provide them with all kinds of goodies such as free air fare could be slightly biased or is it just because they are woefully inadeqaute to rate the majority of companies that they make prognostications about concerning their credit worthiness.
Doesn't this mean that AMR, UAl, Northwest, Delta and all but one or two airlines are junk bond status. Have they mentioned that witht he same amount of press coverage?
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