Hedging fuel has lifted Southwest Airlines

DALLAS, July 24 (UPI) -- Southwest Airline's fuel-price hedging program has put it in a rare position as a profitable U.S. airline in a period of industry decline, analysts said.

By contracting for fuel prices well in advance, the carrier often beats the spot price for jet fuel, USA Today reported Thursday.

Since 1998, Southwest has saved $3.5 billion compared with the average price other airlines paid for fuel, the newspaper said.

The savings equal 83 percent of the company's profits going back more than 9 years, the USA Today reported.

Hedging "is about having an insurance policy against prices rising," said Ben Brockwell of the Oil Price Information Service.

As fuel costs have skyrocketed in the past six months, other air carriers have quickly dropped routes and added fees to ensure adequate revenue. But, Southwest has managed to buy itself time to find a strategy for the rising fuel costs, analysts said.

Southwest's hedging program "means that they'll still be there in a couple of years when you want to fly, even though some other carriers may not be," said Paul Stebbins, chief executive officer of World Fuel Services.