Southwest took an unconventional approach to stabilizing its jet fuel supply earlier this year when it hired a ship to transport barrels of Jet-A from Texas to California.
Southwest CFO Tom Doxey told CNBC that the shipment took place in May, when fuel prices were nearing a peak. The West Coast is more dependent on fuel imports than most other parts of the country, and as a result prices had surged and there were concerns about supply at airports, especially in California.
“It brought like a week’s supply to the West Coast at a time when supply was most constricted… when it was most at risk,” Doxey said.
According to CNBC, the ship carried about 12.6 million gallons of fuel from Houston, through the Panama Canal, to Los Angeles.
To complete the shipment, Southwest used a waiver of the Jones Act, which normally requires shipments between U.S. ports to be made with a U.S.-owned ship. President Donald Trump waived that rule in March in an effort to ease oil prices, which spiked after Iran effectively closed the Strait of Hormuz.
Higher jet fuel prices ate into airline earnings in the second-quarter and forced some carriers to suspend routes and ground less efficient aircraft. Southwest reported Wednesday that it incurred about $900 million of additional fuel expense year-over-year in the period between April 1 and June 30.
The airline told CNBC that concerns over supply have abated since May.
