Southwest Airlines Merger ?

Southwest Airlines History of buyouts:
Southwest's investment in bankrupt ATA Airlines Inc. in 2004 offers a good example of being ready, he said. Of course, the airline is well aware of the pitfalls of acquiring another carrier, a strategy it followed in 1993 when it acquired Morris Air and in 1986 when it bought Muse Air

What is the state of the airline industry?
Very tenuous. I think the business cycle this decade has been very difficult for our industry. You know, finally in 2006 and 2007, you were seeing some profit reports by various airlines. Two emerged from bankruptcy in 2007. It looks like those profits may be short-lived. ...
I think the industry is much unprepared for a slowdown in the economy, especially given the high energy prices. The industry is not well-hedged, and the balance sheets are in terrible shape. The cost structures, for the most part, are still very high, even after bankruptcy. So it'll be an interesting 2008.

What shape are southwest in going into a possible slow period and the high fuel prices?
I feel that we're as prepared now as we ever have been. We've got a great fuel hedge this year. It's not quite as good next year, but it's still very good and certainly provides us tremendous protection.

We're 70 percent hedged next year at about $50 a barrel. And this year, it was over 90 percent at $50 a barrel. So we just don't have the same amount of coverage, but it's still very, very good, and it will still save us hundreds of millions of dollars.

The balance sheet is in great shape. You know, our leverage is well below 50 percent. We're under 40 percent total debt – that's including all of our aircraft leases.
We've slowed down our growth to be prepared for a more difficult economic environment next year, so we won't be adding to the risk profile aggressively. We'll be growing next year about, oh, 4 to 5 percent, I think. In terms of the fleet, that will be a net of between five to 10 airplanes. So, we'll be slowing our capital spending as well. ...