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Bailout Number 3 -- The Airlines?

Posted By admin || 26-Jan-2009

According to an article in the Star-Telegram, Southwest Airlines "recorded one of the worst financial performances in the company's history during the fourth quarter, with a $56 million loss driven by fuel hedging contracts."

This is clearly an "understatement." The Dallas-based airline actually posted a profit for $178 million for 2008. Sounds good, right? Not when you realize what they earned in 2007--$645 million. Sounds like somebody's going to get fired soon, huh? But you can bet it probably won't be the high ranking executives experiencing job losses.

The article goes on to say:

Gary Kelly, the airline's chief executive, called 2008 "one of the most difficult years in aviation's 100-year-plus history." The airline plans to reduce its passenger capacity by 4 percent to help it cope with the decline. It is also reducing the number of new Boeing 737 airplanes it is receiving this year, which will save about $700 million, Kelly said.

Interesting, they didn't mention job losses or bankruptcy. But I can't imagine a company's profits slashed so brutally being able to survive without drastic job losses and/or bankruptcy, if then. Maybe the airlines know something, we don't. Could we see another bailout? Southwest Airlines carries more passengers in the U.S. than any other airline, do you think the government will deem it worthy of being saved from bankruptcy?

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