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sou-west Airlines is the largest domestic carrier by sum up passengers, carrying everyplace 101.9 million passengers in 2008 on over 1.18 million flights. southwestern United States thrives on maintaining low operating expenses, primarily through with(predicate) its immense furnish hedging, which saved the company an estimated $1.1 billion in burn down be in 2008. Because of its low cost, south-west was able to go on profitable for 35 true years, a feat unpaired in commercial melodic phrase history. However, the percentage of fuel costs the company has hedged declines acutely beyond 2009, and the drop in fuel prices caused by the world-wide economic crisis renders souwests key advantage - its low fuel costs in comparison to its competitors - practically less valuable. For the first time, Southwest reported quarterly losings in Q3 and Q4 of 2008, as puff up as Q1 of 2009. As with early(a) airlines, Southwest is vulnerable to drop-offs in consumer occupy for air travel, which argon often a consequence of towering profile terrorist attacks or a slowing economy. However, as a result of its fuel hedges, Southwest is less vulnerable to embrocate price fluctuations than another(prenominal) airlines, whose profits can diminish when oil prices rise.

For example, in 2008 Southwest had 70% of its fuel needs hedged at $51 per barrel, while most other major airlines had provided amid 20% and 30% of their fuel hedged at an total $100 per barrel. Because of its hedges, Southwest maintained an industry-leading average price of $2.44 per congius of jet fuel in 2008. Southw ests hedging contracts extend until 2012, al! though the sum of money of oil hedged drops steadily after 2009, with only 15% of its oil needs in 2012 hedged at $63 per barrel. Therefore, Southwest will become more vulnerable to fluctuations in fuel prices as its contracts mature. Southwest Airlines offers short domestic-only flights with minimal attend to and a simple, cheap fare structure. Southwest replaced the expensive hub and wheel spoke route structure common to most other carriers in...If you endure to get a full essay, order it on our website: OrderCustomPaper.com

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