SOURCE: The Bedford Report
The Bedford Report Provides Analyst Research on Southwest Airlines & SkyWest
NEW YORK, NY–(Marketwire – November 25, 2010) – The Airline industry has performed well as of late, with many companies reporting a speedy return to profitability after last year’s losses. The airlines are benefiting from a return in travel demand amid an industry wide effort to keep capacity from growing too fast. Going forward analysts expect airlines overall to further cement their turnaround despite rising fuel prices and an uncertain U.S. economy. The Bedford Report examines the outlook for companies in the Regional Airlines Industry and provides research reports on Southwest Airlines Co. (
Many investors avoid airline stocks due to concerns about higher fuel prices. Following this month’s “QE2” announcement, one of the bigger concerns is that the already weak US dollar may become even weaker. When the greenback performs poorly against other currencies, crude oil tends to go up due to its relatively inverse relationship with the US dollar.
Many Airlines protect themselves from spiking fuel charges via “fuel hedging.” A fuel hedge contract commits an airline to paying a pre-determined price for future fuel purchases. Airlines enter into these contracts assuming that future fuel prices will be higher than current prices.
The Bedford Report releases regular market updates on the Major Airline Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.
To be clear, there are some dangers with fuel hedging, and today, most airlines take a somewhat cautious approach following catastrophic losses from hedging in 2008 when oil prices spiked and then came crashing down.
One of the few fuel hedge success stories in 2008 was Southwest Airlines. Southwest saved about $1.3 billion dollars from its hedging program in 2008, but the company has tempered its involvement since then. The company’s CFO Laura Write says Southwest has “lessened our hedging primarily because we felt energy prices were going to be under downward pressure between 2010 and 2011.”
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The Bedford Report