Southwest Airlines Essay

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Southwest Airlines Case Analysis This case is about: Sustaining profitable growth in a highly competitive and regulated industry. Define the problem: Southwest needs to maintain profitable growth while maintaining their low cost / low fare differentiation strategy. Background: • Headquartered at Love Field in Dallas, TX • Southwest was incorporate on June 18, 1971 • Initial fleet of (3) Boeing 737 served only three Texas cities- Houston, Dallas, and San Antonio • Southwest has been profitable for 38 consecutive years • Southwest is the United States most successful low fare, high frequency, point to point carrier • Southwest operates more than 3400 flights per day making it the largest US carrier based on domestic passengers • Southwest has nearly 35,000 employees nationwide • Southwest is traded on the NYSE under the symbol “LUV” • Beginning in the fourth quarter 1976, Southwest paid its first of 138 consecutive quarterly dividends to our Shareholders • 2010 Financial Statistics o Net income $459 million o Total passengers carrier 88 million o Average passenger load factor: 79.3 percent o Total operating revenue: $12.1 billion • The Company's fleet has an average age of approximately 11.4 years. • The average aircraft trip length is 653 miles with an average duration of one hour and 55 minutes. • Southwest aircraft fly an average of 6 flights per day, or almost 12 hours and 30 minutes per • Performance- enhancing Blended Winglets have been added to the 737 fleet to improve performance and fuel Key Issue: Operating cost increases threaten Southwest’s low cost / low fare competitive advantage. Solution Criteria: To remain competitive, sustain its market position, and maintain its low cost / low fare reputation, Southwest must “stay the course” on the

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