Southwest Airlines Financial Ratios

Southwest Airlines has been making changes over the past few years that helped them become the largest low-cost carrier in the United States. Most other airlines have been struggling to make it through this economy, but Southwest has found a way to thrive. The airline has dropped their prices and eliminated fees for extras that have allowed them to fill up most flights. One cost they continue to struggle with is offsetting the increasing fuel prices. This has caused some airlines to merge or sell the company to competitors.

Southwest Airlines is a major US airline established in 1967 that services a multitude of cities in all 50 states and beyond. The company is known for its outstanding quality in providing services and it 's cost effective ticket prices to its many passengers throughout the nation. This airline is based in the southwestern United States, in the city of Dallas Texas, and due to the tremendous number of airplanes that it has and the timely service that it provides to its passengers, this airline services more US passengers than any other airline. This airline also has the largest fleet of planes of any economical or low-cost airline service in the world and employees more than 45,000.

The strategy of Southwest Airlines (SWA) has remained the same, which is to give customers low-cost, point-to-point airfare, with excellent customer service. This simple strategy has resulted in SWA posting profits for 30 consecutive years. While other airlines are downsizing, SWA is showing slow steady growth. This performance is evident throughout their SEC Filings.

Financial data from the past three years shows that American Airlines Group, Inc., is financially stronger compared to Southwest Airlines Co., one of its top competitors. Both companies have had similar trends in revenue, stock price, and net income over the past three years. This is why Southwest Airlines was chose for this comparative financial analysis. Although the financial data of both companies show similar trends, American Airlines shows its financial superiority when it comes to Net Income.

Southwest Airlines Southwest Airlines has earned many impressive attributes over the years. The first would be the rise from a small market airline in Texas to becoming a top airline in the United States. During the 1970s, Southwest overcame legal troubles when Braniff and Texas International attempted to put the company out of business by way of harassment. In 2016 Southwest Airlines is larger than both previously mentioned companies. Another impressive aspect of Southwest is the personality and positive attitude former CEO Herb Kelleher brought in the 1980s.

An analysis of Southwest Airlines reveals why they

Today, average people automatically opt for the cheapest flight when traveling. More and more people are becoming unemployed and has become for difficult to purchase airline tickets. The effect of that leads to a low demand of people traveling. However, Southwest is

Since its conception in 1971 by founders Rollin King and Herb Kelleher, Southwest Airlines has stood by their mission statement. The simplistic belief of "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline (Southwest Airlines, 2009)” has served Southwest in becoming a major competitor in the airline industry. It is now the fourth largest

Southwest Airlines is a major passenger airline that provides scheduled air transportation in the United States and near international markets. For the 43rd consecutive year, the Company was profitable, earning $2.2 billion in net income (10K part 1 2015). SW started its service in 1971 with three Boeing 737 and as of 2015 has a total of 704 Boeing aircrafts. The company as of 2015 services 97 destinations in 40 states including seven near continental destinations. SW principally provides point-to-point service rather than the hub-and-spoke service provided by most other airlines. Southwest Airlines is a high-frequency short nonstop hauler; this is its diversification asset in the industry. The key component of its strategy has always been its low-cost structure. Moving forward the PESTEL-Analysis will be engaged to provide illumination into what makes SW a 43 times winner.

Jet Blue managers have not managed the company 's assets efficiently and effectively. Because of the September 11 terrorists attack, Jet Blue 's Return on Assets (ROA) has drastically dropped from 2003 to 2004. It is very far from showing profitability and best use of its assets. Southwest Airlines also experienced a drop from 2001 to 2002 but has sufficiently recovered and is on an upward trend. Their increase from 2002 to 2003 was at 35%. It is showing profit and increasing its ROA. Jet Blue 's performance shows that the company is currently improving and may be stronger in its future performance. Southwest Airlines shows that their current performance and future performance expectations are good.

For Southwest Airlines, the decrease in fuel costs has led to a major boost in profits. In 2015, fuel costs for Southwest were the lowest percentage of operating costs they have been since 2006 (See Appendix 1). Southwest’s stock price, compared to other major airlines, comes in at second: United Continental Holdings has a higher stock price by about

Applying the Porter model to Southwest Airlines, we can see airline that is surrounded by fierce competition and costs [4]. For intra-industry

This proposal addresses the needed steps to be taken in order for Southwest Airlines to see continued growth in the airline industry. Southwest Airlines has been able to remain one of the most profitable airlines in the industry for an extended period of time. Even with the hindrance of the 2001 terrorist attacks involving airplanes and the U.S recession of 2008, Southwest has continued to see strong revenue growth. Meanwhile, other companies were experiencing major losses and in some cases folding. Southwest Airlines has capitalized on the company’s strength of being the top low cost

Since the late of last century, the business model of low cost airline represented by Southwest Airlines has been spreading all over the world, has influence and changed the framework and development of the world airline industry.

Due to a change in passenger profile, business class and first class seats have suffered declining demand. Many companies have been forced to introduce low-cost fare options. Since southwest has been an industry leader and “ahead of the curve” in providing low cost, standardized travel options, it has no need to change strategy, thus saving on restructuring costs. The Company also benefits from its long establishment in the low-cost airline market, allowing the Company to capitalize on significant customer awareness of the brand.