Southwest scales back fuel hedges to prepare for weak economy

Southwest Airlines is overhauling its fuel hedging program as part of a plan to prepare for economic weakness expected in 2009. Southwest's hedging program allowed the airline to buy fuel at reduced prices as prices rose. However, now that prices have fallen, the airline would pay more than the market price if it continued with the hedging program. "Clearly, in this environment, it's a time where we want to be less hedged as opposed to more hedged," Chief Executive Gary Kelly said. The carrier will now buy just 10% of its fuel through hedge contracts. It also plans to sell 10 airplanes and to sell $400 in secured debt to private investors.

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