…Eyeing Fuel, Southwest Requests New Plane

Whenever something bad happens to the heritage carriers, Southwest is usually held up as the example of how to run an airline. True, Southwest is doing well but even the leader of low budget sees some turbulence ahead. That’s why CEO Gary Kelly was in Seattle last week telling Boeing executives he needs a new plane. Not another 737 (he already has 425 of them) — a whole new air-travel-for-the-masses aircraft that borrows technology from the 787 Dreamliner to make it more efficient. “We are now facing energy prices that no airline can make money at, at least with today’s [ticket prices] so we’re anxious to partner with Boeing to find a successor aircraft,” Kelly told The Seattle Times. Southwest is riding out the fuel price spike better than most thanks to some advance planning that will keep its costs lower than other airlines for the next five years. The airline gambled on fuel hedges and, for 2005, is paying just $26 a barrel for 85 percent of its fuel. Oil is now trading in the $65 range. Southwest has diminishing percentages of those hedges for another five years. So, it’s not much of a surprise that Southwest stock jumped a percentage point on news of the Delta and Northwest bankruptcies.