Southwest reported a 3rd quarter loss of $120 million that was largely due to the drop in the price of oil. Southwest had to make a major write down on the value of its heding portfolio due the dramatic fall in oil. Ignoring these mark to market writedowns, the company had an $0.09/share profit. Revenue for the quarter rose 12% to $2.89 billion.
Southwest reported its 69th consecutive quarterly profit on Thursday. The stock price rose in anticipation of the positive earnings report, but on Thursday the stock fell over 6% on a negative long-term outlook, as many of Southwest's hedging contracts will expire over the next four years.
Southwest (NYSE:LUV) will cut 31 domestic U.S. flights but add 40 others to beef up its nonstop service to new markets. LUV's announcement comes amid a general malaise in the airline industry, as profit margins have been hit hard by astronomical oil prices.
Southwest reported very positive third quarter earnings on October 18th. Net Income rose to $162M, up from $48M a year ago this quarter. Despite these strong results, the airline industry as a whole is seeing a slide due to record oil prices. In their earnings call Southwest executives reported that their per gallon fuel cost rose to $1.69, up 7.6% from a year ago this quarter.
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