Southwest raises fares, citing higher fuel prices

… “For us, it’s all about fuel, fuel and fuel,” said Southwest spokesman Ed Stewart.

The carrier’s jet fuel bill is expected to be as much as $600 million higher this year than in 2005. That’s more than its total profit last year of $548 million.

Southwest enjoys protections from high jet fuel prices. By using futures markets in the past few years, it prepurchased much of its fuel at much lower than spot prices.

For the first three months of this year, Southwest has three-quarters of its fuel bought at an equivalent crude oil price of $36 per barrel, compared with spot prices of over $60 per barrel.

That protection will gradually wane, exposing the carrier to the same financial pains that have forced competitors to rethink their business plans, cut jobs and even slash expenses under bankruptcy court protection.

Dallas Morning News