How Did Southwest Airlines Choose For This Comparative Financial Analysis?

American Airlines has some key operational and financial strengths that keeps it ahead of its competitors in the airline industry.

The purpose of this study is to compare Spirit Airlines with American Airlines using the financial ratios of liquidity, activity, debt, profitability and the market, and to derive some concrete conclusions about the financial nature of Spirit Airlines. According to Spirit Airlines (2015) “Historic Stock Lookup,” from 2011 to 2014, the year-end stock prices have increased by 79.4%, which is outstanding. Thus, Spirit Airlines will be used as a benchmark in terms of comparing

This memo focuses on the dividend payout, dividend yield, and dividend per share of Southwest Airlines, while comparing its performance and dividend strategy to that of the industry.

Total Resource Network (TRN) congratulates Southwest Airlines for thirty-eight years of consecutive profitability. This is a major accomplishment that should be applauded especially during this economic recession and recovery period. Southwest’s success has been attributed to their core values and mission that begin with their employees and exceptional customer service. These two attributes along with low airfares have

For over eighty-seven years, American Airlines has served both the flying public and the communities they call home. The airline adapted to changes in the marketplace, developed new technologies to improve air travel, responded to adversity and served as a bridge between cultures and people from every corner of the globe. American Airlines successfully completed new agreements and contracts with labor unions, restructured debt and negotiated more favorable lease and supplier contracts. These improvements contributed to a record-breaking revenue performance of $24.9 billion in 2012.

The purpose of this study is to compare Spirit Airlines with American Airlines using the financial ratios of liquidity, activity, debt, profitability and the market, and to derive some concrete conclusions about the financial nature of Spirit Airlines. According to Spirit Airlines’ Historic Stock Lookup (2015), from 2011 to 2014, the year-end stock prices increased by 79.4%, which is outstanding. Thus, Spirit Airlines will be used as

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

Isidore an Ellis (Nov 2011) states, “American was the world's largest carrier as recently as 2006. But mergers have pushed it to third in terms of miles flown by paying passengers, behind United Continental (UAL, Fortune 500) and Delta Air Lines (DAL, Fortune 500).” Merging with US airways has yielded a positive result and investment has led to improvement. In American Airlines’ first full year of merging with US Airways, they had a record-breaking financial outcomes that benefited their staff and stakeholders. On their website they stated that, “We’ve reached collective bargaining agreements with tens of thousands of our employees, provided raises and hired more than 7,000 new employees. Our customers are seeing the benefits of integration in billions of dollars in investment in new and remodeled aircraft, terminal areas and amenities. Our investors have benefitted, as our stock price has doubled since the merger. We’ve initiated a multibillion-dollar stock buyback and we’ve issued the first dividend in 35 years.” Isidore and Ellis (Nov 2011) points out, “Kaufman, the industry expert, said American needs contracts that would allow it the greater flexibility and lower staffing levels that other carriers

Southwest Airline’s Financial Analysis While Southwest Airlines have been consistently profitable for 44 years, it appears that they have not been the most profitable airline (Southwest Airlines Co., 2017). Moreover, the rankings provided by Business Insider as of April 2016, stated out of the top seven airlines Southwest came in second place behind Delta (Holmes, 2016). Nevertheless, they are currently ranked the number one airline for domestic flights within the United States. Additionally, the ratios listed below will show profitability and liquidity of Southwest Airlines. The data was pulled from Southwest Airlines’ financial statements, ending fiscal year 2016.

American Airlines is the largest the airline company in the world measured by fleet size, revenue, number of destinations served, and scheduled passenger miles flown. Operating a total of 6.700 flights daily, while utilizing over 900 aircrafts, American flies to roughly 350 destinations in 50 countries. Employing over 100,000 employees worldwide, American cites much of its success from its elite and talented workforce. However, American has been forced to overcome significant obstacles since its merger with US Airways in 2013. Consequently, the merger has been slated as one of the most successful mergers in US History. Though proven arduous, their continued hyper-focus and commitment to all elements of its corporate strategy and vision ensured

American Airline profitabilty ratio has improved since the merger with US Airways. The stockholder return drop in 2015 because of low sales.

Their actions of investments are leading them to a successful future. I recommend shareholders to hold onto to their stock and for investors to consider American Airlines. Overall, American Airlines so far had a good year and are expecting better results in the fourth quarter as well in the future for the years to come. Similar to other stocks, unavoidable events will occur that will hurt the company’s stock price and earnings. American Airlines has many positive signs of a great investment such as good Return On Equity of 56.82%, their Return on Invested Capital is 10.61%, the stocks trade at a price to earnings ratio of 12.85, which makes them attractive, the Free Cash Flow Margin is 4.4%, the operating cash flows are healthy it is 2.1 times the net income, and overall the company has shown signs of growth in revenue using the compound annual growth rate of 10.6%. All in all, American Airlines will continue to strive and overdue itself than the other airlines. One negative event will not stop them from reaching their

After calculating the annualized stock price and S&P 500 found in the appendices section I was able to come up with a few comparisons among the U.S airlines. Southwest and Delta have stood out in the past few years for producing consistently strong profits. American airlines have been on the decline the last few years and stocks are still falling due to its higher prices than the other airlines. Investors have acknowledged the strong performance made by Delta and South which helped their stocks improve in recent years. However, the airlines S&P 500 has been on the decline over the past couple years after the company lowered its unit revenue outlook in the past three years. Southwest unit revenue 10 years ago was on the decline due to the 2007

SkyWest Airlines (SkyWest) was a rare breed in the ultra-competitive regional airline industry. As the overall airline industry suffered through terrorist attacks, rising fuel costs, and increased competition, SkyWest was able to grow its business and sustain profitability. The aforementioned events that impacted the airline industry had a severe effect on the structure of the industry as a whole. Several major airlines were in the process of emerging from bankruptcy while mergers among the largest airlines seemed inevitable. SkyWest, like most regional carriers, relied on contracts with the major airlines for its customer base and revenues. With industry consolidation underway, SkyWest’s recent history of

Low-cost carriers pose a serious threat to traditional "full service" airlines, since the high cost structure of full-service carriers prevents them from competing