Originally Posted by prhs1989
It isn't the yields that are causing jetblue problems. No business model is prepared for gas to hit $70 a barrel. When Southwest's hedging comes to an end (I believe next year) and if gas doesn't come down, they will be in the same boat as everyone else.
I think you'll hear the airline execs disagree with you in the coming weeks. Yields are just too low, even at B6 and WN.
Oh, and about those fuel hedges coming to an end next year - not quite. Here's WN's explanation of their current hedging positions:
The Company remains approximately 85 percent hedged for the second half of 2005 at $26 per barrel; approximately 65 percent in 2006 at $32 per barrel; over 45 percent in 2007 at $31 per barrel; 30 percent in 2008 at $33 per barrel; and over 25 percent in 2009 at $35 per barrel.
http://phx.corporate-ir.net/phoenix....041&highlight=
Southwest's fuel cost advantage gets smaller next year (and each year thereafter), yet WN will have an enourmous cost advantage thru 2009 unless oil falls to $25/bbl in the next couple of years.