What's the old joke? The best way to make a small fortune in the airline business is to start with a large fortune. Southwest Airlines, until today, seemed to buck the trend of losing money. But today it reported its first quarterly loss in 17 years, mostly because of the dropping cost of jet fuel.
Company officials are conducting a conference call with analysts and reporters at this hour, and attempted to put a happy face on things. It said that it posted its 70th consecutive quarterly profit. Welcome to the world of financial disclosure. The company subtracted the cost of a hedge fund portfolio it uses to lock in fuel costs. The hedge practice has saved the company millions over the last year, as prices for jet fuel skyrocketed, but when the price of oil drops, the company actually loses money on the practice. Take that away, the company said, and it made an operating profit, it's 7th straight quarterly operating profit.
The company also said it would tap a $400 million line of credit. "You get cash when you can, not when you have to have it," Gary Kelly, Southwest's boss said.
The airline's plans to move into the Minneapolis market next March came up briefly. " It's not an aggressive move," he said. "We're only flying to Chicago Midway, a route on which one-way fares are as high as $400." But he didn't hold out much immediate hope for adding more routes out of the Twin Cities. He said the airline may cut capacity in 2009, the first time it's done so.
While Southwest fees is a "good way to differentiate ourselves from other airlines," Kelly said, he didn't promise that Southwest wouldn't ever follow airlines like Northwest in tacking on charges for previously-free services.
Meanwhile, the soon-to-be-former hometown airline -- Northwest -- will report its third-quarter results next Wednesday.