Southwest Airlines 2000 Annual Report Download - page 4

To Our Shareholders:
The year 2000 was another “championship season” for all of Southwest’s fans: our
Employees; our Shareholders; and our Customers. And these three “groups” have a
wonderfully synergistic interrelationship at Southwest: collectively our Employees
are our single largest share and stock option holders and are also our beloved
Customers; our Shareholders are, to a great extent, our Employees and Customers;
and our Customers are, of course, in many instances Employees and Shareholders.
Employees, Shareholders, and Customers all get a championship ring for the year
2000, but no more than one per person!
2000 was Southwest’s 28th consecutive year of profitability; job security; plentiful
Profitsharing; and of adding value for our Employees — Shareholders —
Customers. It was also Southwest’s ninth consecutive year of increased profits. Our
2000 earnings of $625.2 million (a 31.8 percent increase over 1999) are in
significant part attributable to our fuel hedging program, which produced a $113.5
million offset to the aggregate cost of greatly enhanced jet fuel prices. We are 80
percent hedged on our anticipated 2001 jet fuel requirements at an average price of
$22.00 per barrel of crude oil (at this writing, the market price for crude oil in the
United States is $32.19 per barrel).
Our fourth quarter 2000 earnings increased by 64.9 percent to $154.7 million, which
we presently regard as a favorable augury for our 2001 financial results, in light of
our 80 percent hedge position. We currently anticipate that the expansion rate of the
domestic economy will somewhat diminish in 2001 but that any consequent general
decline in air traffic demand will be offset at Southwest by the fact that we now
provide approximately 90 percent of all of the low-fare airline competition in the
United States of America. In past economic slowdowns, Southwest’s traffic levels
and unit revenues have been sustained by an influx of more cost conscious air
travelers.