Last May, Southwest Airlines started service to the new Northwest Florida Beaches International Airport with a guarantee from the St. Joe Co. that any Southwest Airlines losses would be backstopped by St. Joe.

Neither company has disclosed Southwest’s results at the new Panama City airport, other than to say they’ve been good.

Now, in St. Joe’s annual 10-K financial report filed last week, we learn that Southwest did well enough that St. Joe didn’t have to pay out any money.

“There were no reimbursements to Southwest Airlines during 2010; no losses were incurred per the agreed upon services,” the development company said.

However, higher fuel costs could hurt the profitability of the routes. Therefore, St. Joe has invested in fuel hedges to protect it from Southwest’s rising fuel costs.

“In order to mitigate potential losses that may arise from changes in Southwest Airlines’ jet fuel costs, we have entered into a short-term premium neutral collar arrangement with respect to the underlying cost of jet fuel for a portion of Southwest Airlines’ estimated fuel volumes,” St. Joe said.

And for those who want more detail, St. Joe adds later on:

“In order to mitigate potential losses that may arise from changes in Southwest Airlines’ jet fuel costs, we have entered into a short term premium neutral collar arrangement expiring in May 2011 with respect to the underlying cost of jet fuel for a portion of Southwest Airlines’ estimated fuel volumes. The notional quantity hedged is 200,000 gallons per month, with the call price at $2.55 per gallon and the put price at $1.93 per gallon.”

From the Bureau of Transportation Statistics, here are Southwest’s passenger totals between Panama City and the rest of its system, with nonstop flights to Baltimore, Nashville, Orlando and Houston, from the May 23 opening to Dec. 31:


Nashville 66,137
Baltimore 64,928
Houston 60,914
Orlando 49,191
Other 48,486
Total 289,656

Southwest was the biggest carrier at the new airport, as shown by this chart:


Southwest 289,656 57.0%
Atlantic Southeast 121,265 23.8%
Delta 53,670 10.6%
Pinnacle 43,265 8.5%
Comair 623 0.1%
Swift Air 53 0.0%
Total 508,532 100.0%

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