Southwest Airlines Financial Ratios

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.

The lack of international flights for Southwest presents a tremendous opportunity for the company. Currently Southwest continues to offer cheap flights which could serve as a base for expanding its business into possibly cheap international flights (Koenig, 2009). In July of 2008, Southwest made a smart decision to partner with WestJet in Canada and offer international flights mainly to Canada and the Caribbean ( CBS News – (AP), 2008). While this is a good start the opportunity would benefit Southwest more by trying to expand into international flights through either a merger or acquisition such as the domestic acquisition of Frontier Airlines (Seetharaman, 2009). The opportunity is further magnified due to the economic situations that have hurt Southwest’s competitors and thus are unable to make a move such as the one for Frontier (Seetharaman, 2009). Analysts are already praising the move to acquire Frontier due to the amount of slots gained by Southwest in Denver (Seetharaman, 2009). The international airline market has tons of potential for Southwest as outlined by Jet Blue’s recent introduction to Brazil (Sellers, 2008). Along with international opportunity the domestic scenery has also provided some opportunities such as the recent mention of Atlanta by Southwest’s executive vice president of strategy and planning Bob Jordan (Burress, 2009). Ultimately Southwest should try to acquire more

Some of the core competencies and competitive advantages that exist in the Southwest organization are the low-fare and high customer satisfaction ratings. The American Customer Satisfaction Index has rated Southwest first among airlines for highest customer service satisfaction for over 17 years. In 2011, the Department of Transportation rated Southwest highest among all major airlines in terms of the lowest

As the book describes, any other airlines offering services on the same route as Southwest airlines is considered a competitor. However, the more immediate competitors would be airlines that have more or less the same “low-cost policy” as Southwest. Jet Blue is the biggest competitor encountered by the firm having 4% of the market share, followed by Delta (with 17.10 % of the market), United (11%), Us Airways (13%), Continental (7.60%), and American Airlines (14.30%). Other companies in the industry might as well be an impending threat; however, Southwest Airlines has managed somehow to stay on top of its group on yearly revenues and profits. In addition, all airlines operating in countries where the firm wants to expand could also be considered a threat, even though they’re not already established there. New companies try sometimes to replace Southwest without any success yet. Ex-employees from the firm had created other airlines to try to compete, but almost all of them have filed for bankruptcy before the first 5 years. Jet Blue has been the only known successful attempt, but is still ranked below Southwest Airlines.

Southwest Airlines has high growth and high profitability. However, its cost advantage is not as big as in prior years.

What is Southwest’s secret formula for success? The answer is simplicity! The airliner keeps it operation down-to-earth and consistent. This approach has kept its operational costs down which has allow them to maximize their assets and improve the expectations of their customers. This notion is reflected at the core of Southwest’s CEO and executives. The present CEO, Gary Kelly, still exemplifies the same business practices and ethics, as did the original founders. The airliner started and has continued the low-cost, no-frills, budget company way of thinking and leadership. Upper management positions remains limited but very well compensated for their loyalty and work. Southwest’s management relies heavily on positive relationships; shared goals, shared knowledge, and mutual respect among employees, managers, unions, and suppliers (Gittell, 2002). The company uses these business relationships to build the competitive advantage Southwest has in motivation, teamwork, and harmonization among all of its employees.

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.

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 Analysis Summary Southwest Airlines commenced airline operations in 1971 with the plan; 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 (King & Kelleher, 2016). Their marketing/management scheme and commitment to customer service has paid off and they are currently the largest domestic carrier in the United States. As with any industry they must remain cognizant of the economy and other challenges that arise; while remaining flexible if not fluid in their response to market fluctuations both at present and in the future. Thesis

At the end of the day the main element of Southwest’s culture is team work. Without the drive of every employee to fight for their place in the sky Southwest may not be the multimillion dollar corporation it is today. Much of the hard-working culture can be attributed to excellent

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

Southwest Airlines Company (Southwest Airlines or ‘the Company’ SWA) is a passenger airline that provides scheduled passenger and freight transportation services. The Company primarily provides scheduled services throughout the US and near-international markets. It is headquartered in Dallas, Texas and employs 48,000 people and serves over one hundred million customers annually (“Southwest,” 2015). Southwest Airlines has accumulated over forty years of revenue and is one of the supremely flown airlines in the United States of America (Dess, et al, 2014, p. C137). Recognized for dominating the national or domestic airline market, Southwest Airlines’ diligence has built an

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