Energy: Hedging Their Costs

Whether oil prices go up or down, smart airline companies are covered

A few years ago, before the Iraq war, even before 9/11, Southwest's analysts looked at fuel prices and saw all arrows pointing north. Guided by then chief financial officer Gary Kelly, the airline assembled a strategy to gird against potentially calamitous surges in oil prices. Two full-time oil specialists at Southwest's Dallas headquarters spent most of their time just watching oil markets and crunching numbers. By the time financial disaster struck the industry, Southwest had signed contracts guaranteeing the airline a certain price for fuel in the future, no matter how high the market climbs.

It's no coincidence that Kelly is now Southwest's...

Want the full story?

Subscribe Now


Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!