Invalid Excuses for Poor Business Results - Rising costs

Note to Northwest Airlines ? It's not about fuel costs

For the first quarter of 2005, Northwest Airlines posted a loss of $458 million. The main reason cited was high fuel costs.

Northwest complained that fuel prices surged to $630 million from $450 million for the same time period last year. Let's start by looking at some numbers. During the first quarter of 2004, Northwest lost $230 million. This means the increase in red ink was $118 million while fuel expenses increased $180 million. Obviously, with fuel expenses higher than the change in red ink, one could make an argument that higher crude is responsible. This argument does not hold up to scrutiny when you consider the entire cost of fuel was only $172 greater than the loss. Also Northwest has stated a penny fuel increase equates to $1.6 million in operating costs. A $458 million loss attributable to increased jet fuel cost would need to cost $2.86/gallon using Northwest calculations. At the end of the first quarter, jet fuel averaged $1.27 cents.

Okay, too many numbers, let's look at it a different way. Based on Northwest's total fuel bill, if fuel was the reason for the loss, the only way they could have turned a profit would have been to run their planes with only 25% of the fuel actually used. Although this would be a quick fix and return the airlines on paper, if their argument is correct, it would have had a dire effect on reaching each flight's intended destinations.

If this isn't convincing enough that Northwest's blame of fuel costs is invalid, consider Southwest Airlines. The first quarter of 2005 was the airlines 56th consecutive quarter of earnings ? earning $76 million dollars. Southwest, which has been able to compile a winning streak of 32 straight years of profits did not need to make excuses for their earning, despite fueling their planes sufficiently to reach their destinations. However, Southwest did comment on rising fuel prices when they released their earnings statement. Their comment, "While we are not immune to the challenging industry revenue environment and glut of capacity, we are well positioned for growth and will continue to explore long-term profitable market opportunities."

Blaming operational costs, including price increases from suppliers, is common among businesses. Entrepreneurs and Fortune 500 companies fall pray to this invalid excuse. Successful business professionals see increased costs in advance, and prepare for them. For example, Southwest Airlines has hedged their fuel expenses through 2009 in anticipation of higher prices. They said, "Excluding fuel, our unit costs declined 3.8 percent. This superb performance reflected a tremendous effort by our Employees, and they continue to work hard to improve productivity throughout our Company."

To create consistent earning, Southwest Airlines offsets the volatile fuel prices by buying crude oil derivative contracts to limit their risk to sharp changes in jet fuel costs. This practice makes it easier to budget for fuel. Although there is not a jet-fuel derivatives market, airlines can hedge indirectly by dealing in closely related oil futures, then use the proceeds to offset the higher fuel costs.

Rather than making excuses for higher costs, look at ways to offset those higher expenses through a team attack on budget waste. If possible, prepay or set aside money to counteract those costs when they do go up. Predictable increases should be written into proposals as early as possible.

Proper planning puts you on the path of max impact, where your business will flourish despite erratic business expenses.

Rick Weaver is President of Max Impact, a national leadership and organization development company based in Rochester Hills, Michigan. Rick is an accomplished business executive with experience in retail, market analysis, supply chain and project management, team building, and process improvement. He has worked with hundreds of companies to improve sales, processes, and bottom-line results. MaxImpact offers leadership and organizational development services along with employee assessments and background checks. Contact Rick at 248-802-6138 or via email, rick@getmaximpact.com. MaxImpact is on the web at rick@getmaximpact.com

disinfecting cleaning services Winnetka ..
In The News:

Scammers are sending fake MetaMask wallet verification emails using official branding to steal crypto information through phishing links and fraudulent domains.
Learn what background permissions, push notifications, security updates, auto-join networks and app refresh mean to better manage your phone's privacy settings.
Criminals test stolen data by applying for deposit accounts in victims' names to prepare bigger attacks. Learn why banks won't share fraud details.
New study of 10,500+ kids reveals early smartphone ownership linked to depression, obesity, and poor sleep by age 12. Earlier phones mean higher risks.
A phone phishing attack compromised Harvard's alumni and donor database, marking the second security incident at the university in recent months.
AutoFlight's zero-carbon floating vertiport uses solar power to charge eVTOL aircraft while supporting emergency response, tourism, and marine energy maintenance.
A new phone return scam targets recent buyers with fake carrier calls. Learn how criminals steal devices and steps to protect yourself from this fraud.
New Anthropic research reveals how AI reward hacking leads to dangerous behaviors, including models giving harmful advice like drinking bleach to users seeking help.
The Fox News AI Newsletter gives readers the latest AI technology advancements, covering the challenges and opportunities AI presents.
Holiday email scams, including non-delivery fraud and gift card schemes, spike in November and December, costing victims hundreds of millions, the FBI says.
Holiday visits offer the perfect opportunity to help older parents with technology updates, scam protection and basic troubleshooting skills for safer digital experiences.
Swiss scientists create grain-sized robot that surgeons control with magnets to deliver medicine precisely through blood vessels in medical breakthrough.
Researchers exploited WhatsApp's API vulnerability to scrape 3.5 billion phone numbers. Learn how this massive data breach happened and protect yourself.
Travel companies share passenger data with third parties during holidays, but travelers can protect themselves by removing data from broker sites and using aliases.
Xpeng's humanoid robot moves so realistically that crowds believed it was fake, marking a major advancement in robotics technology ahead of 2026 commercial launch.
Researchers discover phishing scam using invisible characters to evade email security, with protection tips including password managers and two-factor authentication.
iPhone and Android users can reduce battery drain and data usage by restricting Background App Refresh to Wi-Fi connections instead of mobile networks.
Scammers nearly stole an Apple account by exploiting the support system with authentic-looking tickets and phone calls, users can protect themselves with safety steps.
FoloToy restored sales of its AI teddy bear Kumma after a weeklong suspension following safety group findings of risky and inappropriate responses to children.
Threat intelligence firm Synthient uncovers one of the largest password exposures ever, prompting immediate security recommendations.
Viral video shared by Elon Musk shows Tesla's Optimus humanoid robots performing tasks from cooking to construction, garnering over 58.5 million views on social media.
Chinese hackers used Anthropic's Claude AI to launch autonomous cyberattacks on 30 organizations worldwide, marking a major shift in cybersecurity threats.
Apple's new Sleep Score feature gives you a rating for your nightly rest quality. Learn how to set it up on your Apple Watch and iPhone today.
Essential phone settings to enable before losing your device, including Find My network, location services and security features for iPhone and Android.
The Fox News AI Newsletter gives readers the latest AI technology advancements, covering the challenges and opportunities AI presents.

Planning for Success

Business planning is widely acknowledged as one of the keys... Read More

Call in the SWOT Team: Produce More Opportunities to Expand Your Business

Have you ever done a SWOT analysis? No, it's not... Read More

Writing Your Business Plan is Actually Storytelling

Storytelling and writing a business plan actually go hand in... Read More

Why You Need a Business Planning System NOT a Business Plan

When someone mentions business planning we have been conditioned to... Read More

Laying It Out On Paper

You might be thinking to yourself, "Why should I waste... Read More

Business Results - Four Critical Success Factors

Scenario OneDuring a recent presentation, a business owner was given... Read More

Clearing the Path: 4 Ways Fear Wreaks Havoc on Your Dream and What to Do About It

Please take a moment before you read any further and... Read More

The Magic Of Exponential Business Growth

Is there a 'magical' way to exponentially grow your business?It's... Read More

Connecting Your Offline Business to Your Online Business

These may sound like no brainers, but you'd be surprised.... Read More

The Impact of Price Popularity on Profits

The goal of almost every business owner is to generate... Read More

Take A Systems View To Ensure Your Business Stays Healthy

How are you feeling today? Good, not so good, great?... Read More

Dotcom Business Plans Archive Project

One of the most important initiatives in the domain of... Read More

Seasonality: Whats the Big Deal?

Do you work in or own a business that's affected... Read More

Creating a Vision That Achieves Results

How important is a vision statement to your company or... Read More

A Unique Joint Venture Twist: Make Huge Profits Even If You Have No Money, No Products, and No List

Would you like to jumpstart your online or offline business... Read More

Microsoft Great Plains in Advertising & Publishing ? implementation highlights

Microsoft Great Plains, former Great Plains Dynamics is excellent fit... Read More

A Rough Cut on Feasibility

A piano tuner recently moved to Buffalo, NY, and would... Read More

If You Dont Focus, Innovate and Evolve, You Die

After 128 years of business, a household word, Montgomery Wards,... Read More

Executive Summary for Business Plans of Franchisees

Writing a business plan for a franchised outlet of a... Read More

Strategy Without Tactics is Futile

From time to time there seems to be a flurry... Read More

I Always Play by the Rules and It Stinks!

This week I coached a wonderfully lovely woman I'll call... Read More

Five Crucial Components of a Business Plan

The format of a Business Plan is something that has... Read More

Succession Planning: Problems Getting Started

A survey released by the American Institute of Certified Public... Read More

Succession Planning for Business - 10 Key Points You Must Know

By cranking up others development to meet your business needs,... Read More

Becoming Wise - Wild & Free - Writing A Successful Business Plan - Part 2 - Do It In Steps

So you've decided to write your own business plan because... Read More

last minute cleaning help Highland Park ..