Originally Posted by
mcblowfish
I seem to remember WN taking a *huge* write-down on their hedges just a few months ago. I would say that they got burned just as much as everyone else on this strategy.
WN has lost money on hedges in recent quarters, the point I believe
fti was making is that WN is always making or losing money on hedges, in the long-term it evens out, the legacies on the other hand were under-exposed to fuel hedges when they were needed the most, so they compensated by buying a bunch at the top of the market and now have lost a bunch of money on them without having had made a bunch of money on them in the bad times.
Originally Posted by
TheMoose
Yes, the business model works for those who don't mind making a connecting flight for nearly every destination, no first class/upgradeable cabin, and have no desire to fly internationally.
There are some legitimate complaints about WN, but saying that you have to take a connecting flight to nearly every destination really isn't one of them. Sure if you live in a city with another airline's hub the other airline probably fly to more cities, but WN's model is built on point-to-point service, not connecting through hubs. Out of MCI for example they fly to about 20 or so cities non-stop each day, that is far and away more than any other airline, and about as many as every other airline combined actually.
Originally Posted by
TheMoose
You can put WN up against FL and you'll have a clear winner. But the legacies are different animals catering to a different kind of traveler. Comparing WN to DL is like apples-to-oranges, or at least grapefruits-to-oranges. They overlap in only a small area: domestic-only travelers who don't want to upgrade to first class.
I think you're vastly under-estimating the "domestic-only travelers who don't want to upgrade to first class" portion of air travel within the US. That is hardly a "small area", it is in fact a majority of the market. Of course in reality DL and WN don't overlap in some ways because some of DL's hubs are not served by WN (ATL, CVG, and MEM).
I would also point out it was DL and other legacy carriers that were touting how international expansion was critical to their success just a few years ago, but low-and-behold, that turned out to be (another) misguided business decision that ultimately has cost them hundreds of millions in losses as they've lost money and ultimately pulled out of quite a few international markets.
Originally Posted by
TheMoose
But it's not like WN is rolling in fists of cash, either. Their meager profit is still nothing to write home about.
WN's performance relative to the industry is nothing short of incredible. 36 consecutive years of profitability is something to write home about, the only other US airline (not counting regionals which often have contracts guaranteeing profitability at the expense of their partners, e.g., SkyWest) with even one year of consecutive profitability is Allegiant.