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Non-Tech : Southwest Airlines (LUV)) -- Ignore unavailable to you. Want to Upgrade?

To: Sweet Ol who wrote (269)	1/21/2001 10:44:00 PM
From: Sleepless	Respond to of 299

JRH: LUV's fuel cost hedges are described in their 10Q for Sept 2000. The way I read that discussion, the danger for LUV is that fuel prices could drop too quickly this year, so the money they invested in hedging those costs is not rewarded by a bigger spread between market price and hedge price (i.e., hedges are "wasted" to some degree). So, if one believes that fuel prices will drop over the rest of this year, then LUV profits may shrink in coming quarters. But if OPEC is successful in maintaining price levels at $30/bbl or higher, I believe that Luv mgmt thinks that is playing right into their hands. Anyway, your point is well taken that, long-term, LUV's business model and cost-conscious corporate culture are their competitive advantages. Since I am long on LUV, I would not be disappointed with the following combination of events this year: higher oil prices (forcing competitors to raise prices and allowing LUV to raise prices a bit, too - add'l profit for them) combined with a mild slow-down in the economy (making everyone more cost conscious), so the cheapie airline seats are more in demand, relative to the full fares. But then, if I were so smart, my friends wouldn't be making so much $ shorting everything I like...