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sou-west Airlines is the largest domestic carrier by measure passengers, carrying everywhere 101.9 million passengers in 2008 on over 1.18 million flights. south United States thrives on maintaining low operating expenses, primarily by means of its immense furnish hedging, which saved the company an estimated $1.1 billion in burn down be in 2008. Because of its low be, southwestern was able to go on profitable for 35 true years, a feat unpaired in commercial breeze history. However, the percentage of fuel costs the company has hedged declines sharply beyond 2009, and the drop in fuel prices caused by the orbiculate economic crisis renders southwests 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 surface as Q1 of 2009. As with early(a) airlines, Southwest is vulnerable to drop-offs in consumer consume for air travel, whic h argon often a consequence of heights 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 further 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 gal of jet fuel in 2008. Southwests hedging contracts exte nd until 2012, although the core of oil he! dged 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 avail and a simple, cheap fare structure. Southwest replaced the expensive hub and rung route structure common to most other carriers in...If you deport to get a full essay, order it on our website: OrderCustomPaper.com

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