Thursday, October 16, 2008

Southwest Has First Loss in 17 Years

Southwest Airlines Co. lost money for the first time in 17 years as falling oil prices forced the company to write down the value of its fabled fuel-hedging transactions in the third quarter.

Southwest said Thursday it lost $120 million in the three months ended Sept. 30 even as revenue jumped 11.7 percent.

The airline took $247 million in charges, mostly to write down fuel-hedging contracts that are less valuable now that oil prices have plunged by nearly half since July.

Without the charges, Southwest managed its 70th straight quarter of operating profit — $69 million, or 9 cents per share, which was 2 cents per share better than Wall Street expected, according to a survey of analysts by Thomson Reuters.

A year ago, Southwest earned $162 million, or 22 cents a share, in the third quarter.

Revenue rose to $2.89 billion from $2.59 billion, beating analysts' forecast of $2.83 billion.

Southwest is extremely proud of its string of profitable quarters, which began in spring 1991 and spanned a recession and the decline in travel after the 2001 terror attacks.

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