Verasun

[charliep]

Article on the verasun backruptcy. Too long so will just post the link.

http://www.agriculture.com/ag/story.jhtml?storyid=/templatedata/ag/story/data/1225814722796.xml#continue

[TOM4CWB]

Charlie,

I see this whole situation is 'political' to say the least!

Risk Management is key to the survival of any industry/company... ethanol is no different!

It would be interesting to know how SW Air is doing on its fuel hedge program now!

What will we do on hedging fuel for 2009?

WOW... interesting times!

CHICAGO, Nov 5, 2008 (UPI via COMTEX) -- Wavering corn prices have turned on the U.S. ethanol production business, which is struggling to survive in its current form, records show.

One of the country's largest producers, VeraSun, filed for bankruptcy last week, The New York Times reported Wednesday. Industry analyst Ian Horowitz with Soleil Securities expressed concerns over BioFuel Energy, a producer he said was cash poor and, like VeraSun, had done poorly with commodity price hedging, the Times said.

Some companies signed contracts for corn in the summer, when it was priced at around $7 a bushel. Prices have since fallen to around $4 a bushel.

The giant agribusiness Archer Daniels Midland, a large ethanol producer, has seen profits drop in its corn processing division, the report said.

Some feel a wave of bankruptcies could be around the corner although consolidations are possible as soon as credit loosens up, the Times said.

Regarding bankruptcies, "like the airlines, sometimes one goes in, the others run to go in, too," Horowitz said.

www.upi.com

[TOM4CWB]

Charlie,

This is interesting...

"Southwest Airlines reported (16-Oct-08) its 70th consecutive quarterly operating profit. After special charges totaling USD247 million primarily related to mark-to-market adjustments on a portion of the future periods' fuel hedge portfolio required by Statement of Financial Accounting Standard (SFAS) 133, Accounting for Derivative Instruments and Hedging Activities, as amended, the Company reported a third quarter 2008 net loss of USD20 million.



This compares to net income of USD162 million, or USD.22 per diluted share, for third quarter 2007. Excluding these special charges and other special items, the Company reported third quarter 2008 net income of USD69 million, or USD.09 per diluted share, compared to USD156 million, or USD.21 per diluted share, for third quarter 2007. Third quarter 2008 also represents the Company's 70th consecutive quarter of net income, excluding special items. The Company's third quarter 2008 net income, excluding special items, of USD.09 per diluted share exceeded Thomson's First Call's mean estimate of USD.07. Refer to the reconciliation in the accompanying tables for further information regarding special items.

Third Quarter 2008 Financial Highlights:

-- 70th consecutive quarter of profitability, excluding special items
-- Record quarterly revenues of USD2.9 billion, up 11.7 percent from third
quarter 2007
-- Net income, excluding special items, of USD69 million, down 55.8%
-- Net income per diluted share, excluding special items, of USD.09, down
57.1%
-- Cash settlement gains of USD448 million from fuel contracts reflected in
net income





(c) Centre for Asia Pacific Aviation. Date posted: 17-Oct-08"
http://peanuts.aero/low_cost_airline_news/airline/15181//Southwest Airlines reports net loss for third quarter