Southwest Airlines 2011 Annual Report Download - page 57
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Southwest’s Dispatchers, totaling approximately 190 Employees, are subject to agreements between the
Company and the Transportation Workers of America, AFL-CIO, Local 550 (“TWU 550”), which became
amendable in 2009. The Company is currently in discussions on a new agreement with TWU 550.
Southwest’s Ramp, Operations, Provisioning, and Freight Agents, totaling approximately 8,800 Employees,
are subject to an agreement between the Company and the TWU Local 555 (“TWU 555”), which became
amendable in June 2011. The Company is currently in discussions on a new agreement with TWU 555.
Excluding the results of AirTran following the acquisition, Fuel and oil expense for 2011 increased $1.2
billion, or 33.5 percent, versus 2010. On a per-ASM basis, 2011 consolidated Fuel and oil expense increased by
27.2 percent versus 2010. Both of these increases were primarily due to a 27.1 percent increase in the Company’s
average fuel cost per gallon. On a consolidated basis, as a result of the Company’s fuel hedging program and
inclusive of accounting for derivatives and hedging, the Company recognized net losses totaling $64 million in
2011 in Fuel and oil expense relating to fuel derivative instruments versus net losses of $324 million recognized
in Fuel and oil expense in 2010. These totals are inclusive of cash settlements realized from the expiration/
settlement of fuel derivatives, which were $63 million paid to counterparties in 2011 versus $153 million paid to
counterparties for 2010. However, these totals exclude gains and/or losses recognized from hedge ineffectiveness
and from derivatives that do not qualify for hedge accounting, which impacts are recorded as a component of
Other (gains) losses, net. See Note 10 to the Consolidated Financial Statements.
As of January 13, 2012, on an economic basis, the Company had combined derivative contracts in place
related to expected future fuel consumption at the following levels:
Average WTI Crude Oil
price per barrel
Percent of estimated fuel consumption
covered by fuel derivative contracts
First Half 2012 Second Half 2012
$80 to $100 ............................ 10-20% range
$100 to $125 ........................... (1) approx. 50%
$125 to $150 ........................... approx. 20%
Above $150 ............................ less than 5%
Percent of estimated fuel consumption
Period
covered by fuel derivative contracts at
varying WTI crude-equivalent price levels
2013 ............ over 50%
2014 ............ over 40%
2015 ............ over 10%
(1) For first half 2012, the Company’s current estimated fuel consumption covered by fuel derivative contracts
is minimal, with various fuel derivative contracts at WTI crude-equivalent intervals between $80 and $150
per barrel.
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