Southwest’s Profit Boosted by Fuel-Hedge Gains

Favorable cash settlements of $511 million from fuel-hedge contracts propelled Southwest Airlines to a $321 million net profit in the second quarter.

“The current market value of our fuel derivative contracts for third quarter 2008 through 2012 is approximately $4.3 billion as a result of the extraordinary increase in fuel prices this year,” said Southwest CEO Gary Kelly.

Excluding all special items, Southwest’s net income would have been $121 million, a 37.9 percent decrease from the second quarter of 2007.

Total operating revenue for second quarter increased 11.1 percent to $2.9 billion, compared with $2.6 billion a year ago. Total operating expenses were $2.7 billion, as stacked up against $2.3 billion in the second quarter of 2007.