Southwest Financial Analysis

3617 Words Dec 25th, 2005 15 Pages
SOUTHWEST AIRLINES Southwest Airlines is the nation 's low fare, high customer satisfaction airline. Southwest was incorporated in Texas in 1967 and commenced Customer Service on June 18, 1971, with 3 Boeing 737 aircraft serving 3 Texas cities – Dallas, Houston, and San Antonio. At year-end 2004, Southwest operated 417 Boeing 737 aircraft and provided service to 60 airports in 59 cities in 31 states throughout the United States. Southwest Airlines topped the monthly domestic passenger traffic rankings published by DOT for the first time in May 2003 (www.southwest.com). Based on the monthly data for October 2004 provided in their company website, Southwest Airlines is the largest carrier in the United States based on originating …show more content…
Although, there is such a big leap between 2002 and 2003, due to the effects of the September 11 attacks, the airlines tried to recover enough to bring the number back down. The managers at Southwest Airlines are maximizing the use of the shareholder 's funds. On the other hand, Jet Blue is doing very poorly in utilizing their shareholder 's funds. But in fairness, they were able to bring their percentage down in 2004. In order for Jet Blue Management to recover and compete against the industry, they have to initiate a serious overhaul of the strategic management of managing funds.
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.
The gross margin of Southwest Airlines has remained steady in the three year period presented above. Southwest Airlines has a relatively high gross margin rate, primarily

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