Southwest Loses $120M on Bad Oil Bet

Otherwise, quarter beat expectations

By Kevin Spak, Newser Staff

Posted Oct 16, 2008 7:36 AM CDT

(Newser) – Southwest Airlines posted a $120-million third-quarter loss today, due almost entirely to a one-time $247-million charge on an oil bet gone wrong, the New York Times reports. Southwest aggressively locks in its fuel costs far in advance, which looked brilliant last year, as oil prices skyrocketed. But oil’s steep decline this quarter has turned the contracts toxic.

Excluding the charge, Southwest beat analyst estimates, earning $69 million on revenues of $2.9 billion, an 11.7% jump. CEO Gary Kelly called the oil charge a “fluke,” and said he’s happy with his results, despite the first quarterly loss in more than 17 years. “The world is on fire, and we’re in pretty good shape,” he said. “We’re going to fight hard to blast through the headlines.”

[Images (4)]

[Quotes (1)]

A Southwest Airlines jet lands at Midway Airport in Chicago, Tuesday, Oct., 16, 2007. (AP Photo/M. Spencer Green)

Passengers get off a Southwest plane in Burbank, Calif., Sunday, March 16, 2008. (AP Photo/Paul Sakuma)

A Southwest Airlines jet takes off Wednesday, July 18, 2007, from Sky Harbor International Airport in Phoenix. (AP Photo/Matt York, File)

In this April 23, 2007 file photo, a Southwest Airlines Boeing 737 turns east across the Cascade Mountain Range. (AP Photo/Charles Rex Arbogast, file)

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The world is on fire, and we’re in pretty good shape. We’re going to fight hard to blast through the headlines. - Gary Kelly, CEO of Southwest Airlines

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Southwest Loses $120M on Bad Oil Bet