FINANCIAL ANALYSIS

Financial Analysis

Southwest Airlines Financial Analysis 2008-2010

Company Overview

Southwest Airlines is the largest airline company in America. Southwest operated approximately 3,400 flights a day and utilizing a fleet of 552 aircraft. This airline was founded in 1967 by Herb Kelleher and Rollin King to offer airline services within the state of Texas. In the early period, Southwest Airlines has experiences a huge loss and financial troubles. The domestic airline industry of USA encountered a decline in late 1990's with a decrease in 72% of overall customer due to air fares in industry. They were facing no growth in industry, during that time. Simultaneously, an intense competition and rivalry was faced by all airline companies. Southwest Airlines (Being 4th largest carrier organization in terms of traffic flown) encountered similar fare wars with narrowing profit margins. In this state of crisis, Southwest Airline CEO Keller took over in 1981and analyze the major problem of the airlines, he showed his leadership qualities by visiting and listening to the worker, checking maintenance, he stood out through product differentiation and low-cost strategy. He didn't divert, and were more focused was towards their goals and customer satisfaction.

They successfully differentiated themselves from their competitors and manage to sustain marginal profitability. Southwest functions more than 3400 flights a day coast to coast which makes southwest the largest U.S carrier based on domestic passengers. Southwest has acquired Orlando-based AirTran Airways and expected to complete the incorporation of the two airlines over the next several years. The mission statement of south-west airline is divided into two parts. 1st is dedicated to their customers and 2nd toward their employees. The main focus of south west airline is on their customer services. They dedicate their highest quality to their customers in terms of warmth, friendliness, individual pride and sprit. They tend to drive this strategy through their second part of their mission statement, which states that they are the company of people, to have the quality of work they believe on having quality employee, who are motivated enough to work for the company's benefit (www.southwest.com).

South west airlines had it defined in a very uncomplicated and undemanding way. South west claimed that, they are company of people and not planes. Hence, through customer satisfaction they tend to increase their growth rate in terms of both customer satisfaction as well as capitalizing of profits. They tend to attain success in the long term. At South West, low cost and product differentiation provision of the best customer services, is the strategic competitiveness advantage. Major competitors of Southwest face Direct (Regional Competition). Direct competition includes, AMR Corporations, JBLU (JetBlue Airways Corporation), UAL (United Continental Holding). These are regional airlines. Indirect competition is with foreign airlines. An organization achieves competitive advantage only, when they adhere to their mission, vision and objectives.

They develop a series of objective to achieve competitive advantage. However, financial highlights of 2010 of Southwest airlines comprise of Net Income of $157m, Total passengers carried are $88 million, Revenue of $14,664m, Total Assets $17,885m, Shareholders' Equity ...