Running head: SOUTHWEST AIRLINES

Case Analysis - Southwest Airlines

Jason Parker
BAM 479 Strategic Management
Siena Heights University
November 20, 2016

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Case Statement

Southwest Airlines operates in a highly competitive industry where there are a limited
number of companies fighting to be the consumers choice to get them to their scheduled
destination. To stay ahead of the competition, new strategies must be implemented constantly.
Mission Statement
According to the Southwest Airlines website The Mission of Southwest Airlines is
dedication to the highest quality of Customer Service delivered with a sense of warmth,
friendliness, individual pride, and Company Spirit (One Report, 2015, p. 10).
Vision Statement
The vision of Southwest, as taken from its website, is To become the worlds most
loved, most flown, and most profitable airline (One Report, 2015, p. 11).
Table 1: Mission Statement Evaluation Matrix
MissionStatementEvaluationMatrix
Customers

Yes

Product / Services

No

Markets

No

Technology

No

Concern for survival, Growth, Profitability Yes

Philosophy

No

Self-Concept

Yes

Concern for Public Image

Yes

Concern for Employees

No

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Evaluating Table 1 shows that Southwest Airlines does not have all of the essential
components of a solid mission statement. According to the matrix, the company only touches on
four of the nine essential components of a mission statement. Although there is a concern about
the customer, it does not specifically identify who they are. There is no mention of a specific
product with Southwest being a service provider. Even so, it missed the opportunity to speak
about the markets in which they offer its services to. With the service beginning to cater to
international markets, the statement should be altered to make a mention of this. Again being a
service provider specifically, there was nothing stated about any of its technology. The
Southwest vision statement has a concern for its public image as well as the self concept because
of the desire to be the most flown and most loved airline. If it can be seen as the best, it should
drawn more passengers to its business. To do so, Southwest has a philosophy of being dedicated
to providing the highest quality of customer service in the industry as touched on in the mission
statement. But the customer is not all of the focus at Southwest, as there is a strong focus of
creating a sense of individual pride for the employees who are the number one asset in its eyes.
Lastly, the company strives through its vision to become the most profitable airline in the world.
Company Profile
Southwest Airlines is a people oriented, low cost pricing organization that uses its highly
motivated, fun employee-centered culture focusing on the LUV to provide the best experience
possible to its customers. Southwest Airlines Co was incorporated in Texas on March 15, 1967.
The Company operates Southwest Airlines and AirTran Airways, passenger airlines that provide
scheduled air transportation in the United States and near-international markets. As of December
31, 2013, Southwest's and AirTran's combined active fleet consisted of 680 aircraft, including
614 Boeing 737s and 66 Boeing 717s. Southwest principally provides point-to-point service,

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rather than the hub-and-spoke service provided by U.S. airlines. Southwest does not provide
international service; however, in April 2013, the Company began converting AirTran service to
San Juan, Puerto Rico, into Southwest service, Southwest's first scheduled service outside of the
continental United States (MSN, 2016). Southwest represents the model for budget upstarts
everywhere by becoming the largest domestic airline in the U.S. according to number of
passengers carried. Over 70 million passengers fly Southwest every year to over 60 destinations
around the country (Southwest company profile, 2016). Passengers have found that its rock
bottom pricing creates a better alternative to driving to their longer destinations. They are
willing to forgo in-flight meals, baggage transfers, and other traditional frills for the
economically friendly company. The following is a short list of company highlights.
Company Milestones

1967 Air Southwest Co. is incorporated

January 13, 1974 Southwest announces its first profitable year was 1973

January 23, 1974 Southwest carries its one-millionth customer

June 27, 1977 Southwest Airlines common stock listed for trading on the New York
Stock Exchange under ticker symbol LUV

May 2, 2011 Southwest Airlines closes its purchase of all of the outstanding common
stock of AirTran Holdings, Inc., the former parent company of AirTran Airways
(AirTran).

September 8, 2014 Southwest Airlines introduces a modern new look to its iconic brand
today at an event dedicated to its Employees. The airline proudly unveiled a new aircraft
livery, named Heart, airport experience, and logo

November 2, 2014 Southwest Airlines reaches a milestone in the final stage of its
integration of wholly owned subsidiary AirTran Airways by launching Southwestbranded flights to Punta Cana, Dominican Republic, and Mexico City

February 19, 2016 Southwest Airlines is named to FORTUNE's 2016 list of World's
Most Admired Companies. Southwest was ranked as the No. 7 Most Admired Company,

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and is the only commercial airline to make the Top 10. Southwest has been in the Top 10
for 17 out of 22 consecutive years on the list (Southwest among to 10, 2016).

External Assessment
Opportunities
1. International expansion
2. New technologies
3. Cheap fuel cost
4. Addition of first class
5. Air travel predicted to increase
6. Domestic expansion
7. Mergers or Acquisitions
Threats
8. Weak economy
9. Higher energy costs (Fuel)
10. Terrorists
11. New entrants to the marketplace
12. New government regulations
13. Current competition
14. Rising labor cost (disputes)
15. Potential for high speed rail systems
Total

Weight Rating Weight Score

0.12
4
0.48
0.04
3
0.12
0.05
4
0.20
0.10
2
0.20
0.03
4
0.12
0.06
2
0.12
0.10
1
0.10
0.12
0.09
0.08
0.01
0.05
0.07
0.05
0.03
1

2
4
2
1
2
3
2
1

0.24
0.36
0.16
0.01
0.10
0.21
0.10
0.03
2.55

Opportunities
Southwest still has many national and international markets that are not tapped; it has a
real opportunity to capitalize on that by offering a new long haul service that steers away from its
current business model. Because of this benefit, its weight was around the top strength at 0.12
and viewed as a major strength rating of 4.
Advancing to the latest technologies can be an opportunity to become more cost effective
as well as offering new products or services to the end customer. The internet poses ways for the
company to try new things for online ticket purchases and enhancements. Technology is always
changing so this weight is 0.04 and a rating score of 3.

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Cheap fuel costs gives Southwest the opportunity to continue with its strategy of fuel
hedging that takes advantage of the low prices against the threat of increases in the future. It has
been a productive strategy so far and gives the company a strength point. This is the least
important strength and is weighted 0.05 because of that, also it come with a rating of 4.
Listed as a weakness, not having a first-class or a business section is another avenue
that Southwest could explore to gain additional customers. Business travel is an ever increasing
trend in the world, it would be smart for Southwest to try to grab some market share be offering a
new seating class. This is an important opportunity to try taking advantage of. I used the weight
score of 0.10 and rating of 2 due to its importance to the growth of the company.
Being that the industry is only expected to increase air travel going forward; the rating
is fairly low with a weight of 0.03 and a rating of 4. This would be a bigger opportunity to
exploit if there were more certainty and surely Southwest is preparing for growth.
To stay competitive and to achieve more market share, Southwest can give itself a
presence in every terminal domestically that it currently does not offer. This would be dependent
on a good cost analysis to see what markets could be profitable that are not utilized currently.
Since this has the ability to take market share and revenues from the competition, it was
weighted at 0.06 and a rating score of 2 as a big opportunity they havent tapped into yet.
The possibility of a merger or acquisition of another smaller airline could be an
opportunity to grow through horizontal integration. There is a lot of requirements for this
strategy to work, but I feel that Southwest possess most of those qualities and could use that to
its advantage. This has a weight of 0.10 with a ranking of 1 because of its current lack of merger
strategy.

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Threats

A weakening economy can have a tremendously negative impact on all industries,

including the airlines. There would be less business travel as companies try to save on expenses
and people may find it cheaper and be more likely to use another form of transportation to get to
their destinations. This is a real threat and because of that received a weight of 0.12 and a major
weakness score of 2.
Currently fuel costs have been at some of the lowest levels of the past decade. Many
factors including supply and general inflation could pose a big threat to the company with the
real possibility of price increases to energy costs such as fuel. This is weighted at 0.09 with an
average response rating of 4 due to its potential effect on the costs involved with flying.
Increased fuel costs cause a number of things that could hurt the company. Increased fuel cost
would raise ticket prices and possibly hurt the consumers demand for flights.
Terrorism has an importance of 2 and received a weighting of 0.08 since it is a constant
worry and threat to society. As history has shown, the airlines have been a major target for this
threat. An act of terrorism that happens anywhere, regardless of if it happens involving an airline
will make people less likely to want to travel by airplane. This presents a threat to not only
Southwest, but to the airline industry revenues in general.
Potential new threats to the marketplace are only a minimal threat to Southwest.
Currently, there are not many new participants to this industry for various reasons such as
government regulations, which scored as another outside threat. Minimal concern for this threat
gives it the low 0.01 weight with a score of 1.
As with most industries, the government is always changing or adding regulations and
restrictions. This could pose a threat to Southwest in regards to competition and impact the

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bottom line. Since there is already a good amount of government intervention, this receives a
lower weight score of 0.05 and a score of 2.
Industry competition is very high for the airlines. Southwest is the largest players in the
low cost carrier market, but it is also competing for business with all other airlines. Southwest
has to prove to customers why they should fly on its airline. All airlines alike can basically
transport the customers to the destinations where they would like to go or to a close surrounding
area. This should be considered a major threat and was given a weight of 0.07 and a score of 3.
Labor costs can pose a threat to a number of industries, but with Southwest having a
union in place, this can become more challenging in regards to contract negotiations. For that
reason, this threat is weighted at 0.02 with an average response rating of 2 due to its effect on the
bottom line as well as causing potential labor strike and shutdowns.
Other countries have already adopted high speed rail systems, but the U.S. still lags
behind. If this were to ever catch on it could have quite a big impact on the airline industry.
Pending costs, people might opt for the rail system on shorter travels. The rail system offer
benefits that the airliners wouldnt be able to compete with. Since this has been talked about but
never seems to stick, I keep the threat minimal with a weight of 0.03 and an impact of only 1.
Total Weighted Score Interpretation
The total weighted score of 2.55 shows that Southwest is average to slightly above with its
external assessment. This will provide management with enough information to make informed
decisions on how to leverage the opportunities and mitigate the potential threats.

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Internal Assessment

Strengths
1. Superior financial position
2. Brand Appeal
3. Largest Domestic network
4. Low Cost Structure
5. Management Approach
6. Southwest Airlines University
7. Jet fuel conservation
8. Uses only Boeing 737
Weaknesses
9. Limited seating choices
10. Limited international presence
11. In-flight entertainment options
12. Its practices are being copied
13. Flight booking limitations
14. Unionized employees
Total

Weight Rating Weight Score

0.12
4
0.48
0.10
4
0.40
0.07
3
0.21
0.09
4
0.36
0.10
3
0.30
0.05
4
0.20
0.03
3
0.09
0.03
3
0.09
0.11
0.07
0.09
0.03
0.06
0.05
1

1
1
1
2
2
2

0.11
0.07
0.09
0.06
0.12
0.10
2.68

Strengths
Southwest has been one of the most profitable airlines, many others have struggled to
even turn a profit. For over 42 consecutive years, Southwest has been profitable. So without
even having to dive down into its books, that is an impressive strength of the company. Because
of this benefit, its weight was around the top strength at 0.12 and viewed as a major strength
rating of 4.
The focus of Southwest has always been on people, whether that is its employees or its
customers. The brand is one of the most highly recognized and its heart resonates with
everyone and signifies that personal touch they are all about. That is why I weighted this 0.10
and strength of 3.
Southwest was found to be the largest domestic network. It had more departures than any
other airline. Being the largest is a strength that only leads to opportunities. Southwest has the

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customer base to build upon and the resources to use to its advantage. This is its least important
strength and is weighted 0.07 because of that, also it come with a rating of 3.
Southwest has been successful in keeping its reputation as a low fare airline. When
people travel they are looking for the best deal. To be able to get a highly reputable airline for a
lot less than other airlines, goes a long way. That is just another reason why they were the
largest domestic carrier. Being able to maintain low fares is an important strength for Southwest
to maintain. I used the weight score of 0.09 and rating of 4.
The management at Southwest puts a lot of stock into its employees; it uses what they
call a warrior spirit to continuously improve. Its people are empowered to think and act like
the owners. They can find creative solutions to any challenging issues. This warranted the
weight of 0.10 because it is significant currently but only a rating of 3 due to how quickly it can
change.
Southwest uses a state-of-the-art training facility to give technical training and personal
and professional development opportunities to its employees. It gives them the benefits of
learning in a realistic environment and practice their on the job skills. This unique program sets
Southwest apart from other airlines and is why its weight is 0.05 and is viewed as a major
strength of 4.
Southwest has made significant strides to reduce its amount of fuel consumption. They
are installing wider and lighters guest seats, switching over to tablets versus paper manuals, and
adding the signature winglets to its planes have led the way to a 29% consumption reduction in
the past 10 years. That is why I weighted this 0.03 and strength of 3. The continued efforts help
to improve the companys bottom line.

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The use of only the Boeing 737 line of plans is strength of the company because of its
many benefits. This strategy can keep the costs down in association with maintenance. It also
offers an ease of use to pilots who can fly any of their planes. This keeps things simple and can
allow the mechanics, and crew members to have to focus on one plane and optimize their skills.
This is a minimal strength and is weighted 0.03 because of that, also it come with a rating of 3.
WEAKNESSES
Compared to its competitors, Southwest does not offer a first-class seating section.
This weakness does present a nice opportunity for the company. By adding this, it can appeal to
a new customer. This received a weight of 0.11 and a major weakness score of 1.
Southwest is just recently began services to international markets. This weakness
presents the company with a large opportunity for growth. Currently the company only has 11
international destinations. This is weighted at 0.07 with an average response rating of 1 due to
its potential for revenue increases.
When flying with Southwest, the in-flight entertainment options are limited and are not
complimentary. The choices are limited to using a personal device and the customer must
purchase Wi-Fi service for $8. That is if the flight is even Wi-Fi eligible, the assumption is that
longer flights would be the ones with Wi-Fi. Not to mention, passengers have to pay to watch a
movie on top of the Wi-Fi cost. Because of this, the weighted score is 0.09 with an importance
of 1.
Every successful business regardless of industry will be copied. Competition recognizes
what is working for Southwest and finds ways for them to imitate it as well. It is just part of
business, but Southwest needs to keep adapting. If it get complacent, others will reap the same

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rewards as Southwest and this could affect its bottom line. They need to stay unique. The
weight here is only 0.03 and is a minimal challenge rating of 2.
What I have found online is that to book a flight with Southwest, customers have to go on
its website directly. Currently it is not working with any third party vendors. This could limit
the exposure to people who use those vendors such as Orbits, Expedia and Travelocity for
example. This weakness has a weight of 0.06 and an importance of 2. The vendors most likely
charge a fee for this and since Southwest is very cost conscious, it has been reluctant to try this
option. However, this is an option that management should consider down the road.
Since nearly 83% of Southwest employees are a part of a union, this leaves the company
with some weaknesses that it wouldnt be subject to without it. Unions cause labor costs to rise,
they lead to potential strikes or work stoppages. They also reduce the control that a human
resources department would have on oversight. Other setbacks are possible legal battles and
additional accounting requirements for payroll to handle. Although a common practice amongst
the industry, the weakness it represents scores a weight of 0.05 and a score of 2 because of its
potential.
Total Weighted Score Interpretation
The total weighted score of 2.68 indicates Southwest is really an above average company. The
numbers alone make it a pretty strong player within the industry. If the other major airlines were
to be evaluated, I doubt they would stack up. There is always a need to keep up with technology
and innovation but maintain its bread and butter of offering low fares.
SWOT Analysis
Southwest is a well-run company that has a lot of strengths that it can leverage to offset
the weaknesses. The airline industry has a number of threats that Southwest is not exempt from

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either. The main strength is its financial position of 43 straight years of being a profitable
company. These resources give them the ability to address some of the weaknesses like not
having different segments of seating and the lack of in-flight entertainment options.
Management is strong and smart enough to take advantage of opportunities by adding a business
or 1st class option to its airliners which would create a whole new untapped market. The threats
they face at Southwest are the same as any business where costs are constantly rising and dually
as important that potential for a downturn in the economy. Southwest has faced some rough
times as with any company, but it has always managed come out stronger. This is a testament of
a company with a great management. No company can hide from competition, it is what
Southwest will do to keep with the changing times that will prove it is a true leader in the
industry.
Porters Five Forces Model
Porters five forces model is a competitive analysis tool used to help develop company
strategies due to competition within the industry. The five factors are 1) Rivalry among
competing firms 2) Potential entry of new competitors 3) Potential development of substitute
products 4) Bargaining power of suppliers and 5) Bargaining power of consumers. The
following details how these forces are affecting competition within the airline industry.
Some of the major U.S. competitors of Southwest include Delta, American, Spirit and
United Airlines to name a few. The airline industry rivalry among competing firms has been
increasing due to mergers and acquisitions within the airline industry. For instance, in 2008
Delta merged with Northwest Airlines. American merged with US Airways and United joined
forces with Continental Airlines in 2012. In 2011, Southwest merged its operations with
AirTran. (U.S. airlines and acquisitions, 2016) Rivalry amongst airlines is an ongoing battle

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with each carrier competing in every way to steal market share and customers from each other by
any means necessary.
Potential entry of new competitors is fairly limited for a number of reasons. First would
be the amount of capital needed to get started in the business. The cost of acquiring planes and
the technology to be competitive would be quite substantial. Also a majority of consumers are
going to look to a trusted and reputable name before choosing an airline with no known history.
These established companies can leverage their name and resources to make it difficult for new
entrants to survive in the industry.
There are a few substitute products in the airline industry so the threat is low. Other
methods of long distance travel would include cars, buses and trains. The consumer is faced
with a number of choices when deciding whether or not to use these alternates. The costs
associated with the type of travel, amount of time, the distance traveled, personal preference and
the routes offered are all taken into consideration when deciding on using a substitute product.
The airline industry only has two manufacturers of airplanes, Boeing and Airbus. This
gives very little room to bargain for the airliners. Boeing is currently the sole provider of aircraft
for Southwest. For Southwest to decide to add or change over to Airbus, it would involve
relatively high switching costs. The current situation gives Boeing very high bargaining power
over Southwest.
Customers in the airline industry lack real bargaining power because they lack the ability
to coordinate and organize. The extent of which airlines can engage in price discrimination will
differ depending on the route and type of customer. Consumers have a limited number of
choices when selecting an airline to get them to their destination. Because there are so few

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providers, the consumer has to accept the pricing that is offered. There is not a good alternative
that would allow the customer to negotiate the price being charged. So the choice has to be
made on personal preference or based on who provides the most value for their dollar. The
internet give the consumer an advantage of being able to shop the market for the best deals and
services available. The switching cost is low for customers even though some may have added
benefit of loyalty programs that could warrant a reason to prevent switching to another carrier.
The analysis using Porters five forces model confirms that the competition within the
airline industry is quite intense. The threat is of new entrants and substitutes are low, but the
bargaining power for Southwest is very low due to the lack of suppliers for airplanes. Lastly,
there is no real threat of customers of the airline industry to use their bargaining power against
them due to the lack of price flexibility. The fierce competition could cause a price war amongst
carriers eventually.
Southwest Airlines SWOT Matrix
The SWOT Matrix was chosen as the matching tool to best represent Southwest Airlines
because it helps managers develop four types of strategiesand are stated in quantitative terms
to the extent possible (Davis, 2013, p. 176). The matrix matches company strengths to
opportunities and to threats in hopes of creating strategies for management to use its strengths to
address those other items. The same is done with weaknesses; they are matched against both
opportunities and threats in order to see if the external factors can present options to target any
weaknesses the company sees relevant. The ultimate goal is to minimize threats and to eliminate
weaknesses. The following is what was found in regards to Southwest Airlines.

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Strengths
1. Superior Financial Position
2. Brand Image
3. Largest Domestic Network
4. Low Cost Structure
5. Management
6. Southwest University
7. Jet Fuel Conservation
8. Boeing 737

Weaknesses
1. Limited Seating Choices
2. International Presence
3. In-Flight Entertainment
4. Its Practices Are Copied
5. Flight Booking Limitations
6. Unionized Employees

Opportunities
1.International Expansion
2. New Technologies
3. Cheap Fuel Costs
4. Addition of 1st Class
5. Predicted air travel growth
6. Domestic Expansion
7. Mergers or Acquisitions

SO Strategies

WO Strategies

Threats

ST Strategies

1. Weak Economy
2. Higher Energy Costs
3. Terrorism
4. New Entrants
5. Government Regulations
6. Competition
7. Rising Labor Costs
8. High Speed Rail System

1. IncreaseDomestic
Markets
(S1,S2,S3,S4,O5,O6)
2. PotentialMerger
(S1,S2,S5,O7)

1. UpdateFleet
(S8,T2)
2. Futurespurchase
(S1,S7,T1,T2)
3. EnhanceLoyaltyand
Marketing
(S2,T4,T6)

1. InternationalExpansion
(W2,O1,O5,O7)
2. PremiumSeating
(W1,O4)

WT Strategies
1. ThirdPartyBooking
(W5,T6,T7)
2. Attempttoremove
union
(W6,T7)

SO Strategies
SO strategies use a firms internal strengths to take advantage of external opportunities
(David, 2013, p. 176). Two of the opportunities that Southwest have, can be exploited by a

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number of their internal strengths. By using its financial strength, brand image, low cost
structure and largest current domestic network presents the opportunity to expand operations in
the domestic market. It can offer a longer haul flight to places like Hawaii or Alaska using this
strategy. Having a low cost structure will allow Southwest to be competitive in this new market
place.
Many of the airlines are choosing to grow by mergers and acquisitions. Southwest is in a
position to capitalize on this strategy by using some of its many strengths. If this strategy is
chosen, Southwest can take advantage of its strong management, iconic brand and superior
financial position of the company. This opportunity does not come without risks; however a
well-planned approach and a merger or acquisition of the right company could bring added value
to the Southwest name while presenting the company with new opportunity to build upon.
WO Strategies
The WO strategies aim at improving internal weaknesses by taking advantage of external
opportunities (David, 2013, p. 176). One of the main weaknesses that Southwest faces is that it
does not capture a large enough piece of the international travel market. Just recently they have
begun to offer a limited number of international flights that focus on destinations that are not
overseas. The external opportunity presented by this weakness in addition to international
expansion is that research has determined that air travel will continue to grow in the future as a
preferred method of travel. The focus would extend to as far as Asia and other European
markets, thus tapping into an unknown market by Southwest.
Southwest does not offer what most would consider a business class of premium
seating onboard its airlines. This weakness can be offset by the opportunity of enhancements to
the current fleet of airliners that would include a first-class section of the plane. A whole new

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market of clients could be attracted to Southwest. Currently the company only offers for
additional fee, the passenger to receive priority boarding over the other passengers. Most
business professionals traveling for work would prefer to have a preferred section of the jet with
additional comforts that are not afforded to the common passenger. A premium class of seating
would give Southwest a chance to steal customers from other airlines that currently offer this
type of seating.
ST Strategies
ST Strategies use a firms strengths to avoid or reduce the impact of external threats
(David, 2013, p. 176). To leverage its strengths against threats, the two strategies that are
suggested would be to update its fleet of Boeing planes with new technologies to make them
more efficient and to purchase crude futures as an investment in the future. One of the benefits
of having and using the same airplanes is to keep things simple and to reduce costs. But as they
age, the airliners will need newer technologies that will lower costs by making the planes
consume less fuel while in flight that will combat higher energy costs on the horizon. Currently
Southwest has made big strides in jet fuel conservation by reducing consumption by 29% over
the past 10 years. This strategy can push that number even higher.
The second strategy of purchasing future crude contracts at todays prices is another way
to leverage its financial position to hedge future price increases. In preparation for a potential
downturn in the economy, this uses one of its strength now to prevent a major price hike from
causing unforeseen challenges financially. Aside from using current assets to buy this
insurance there is not a lot of downside risk as the fuel will ultimately be consumed regardless.
Threats of new entrants to the market as well as the current fierce competition that exists
in the airline industry, offers Southwest yet another strategy. In the world of evolving use of

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social media, new and changing marketing is needed to keep companies fresh in the mind of the
consumer. The strong brand image can be used to enlighten customers in a variety of new ways
online. This strategy can be used to set them apart from while establishing loyalty amongst its
current customers. A refreshed frequent flyer or loyalty program can go a long way for people
who use its services on a consistent basis.
WT Strategies
WT Strategies are defensive tactics directed at reducing internal weakness and avoiding
external threats (David, 2013, p. 176). One strategy that attempts to ward off the threat of
competition and rising labor costs would be to offer third party booking of flights. This would
also reduce the current company weakness of the customers being limited as to where they can
book a flight using Southwest. Outsourcing to vendors such as Expedia or Travelocity for
instance can offer a better experience for the cost conscious consumers who are searching for
their best option by helping to see a comparison of prices at their fingertips. These services also
offer a one stop show for booking a flight and hotel which currently is not an option when using
the Southwest website to book with them.
Another defensive tactic that Southwest might explore would be the removal of unions
within certain levels of its employees. Southwest knows that its employees are one of its major
driving forces and treats them as such. There is no reason they have to be a unionized group of
workers. Travel by air is an industry that cannot afford a disruption in its service. A union may
allow worker to go on strike and the effect on Southwest would be devastating. While there are
positives, there are also a number of disadvantages to having a union. To eliminate this from the
company would be beneficial and reduce that weakness.

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FINANCIAL ANALYSIS
Southwest Airlines has been known for its financial strengths amongst the competition in
the airline industry. EBITDA is a number that represents an approximate measure of a
companys operating cash flow based on the income statement, but it ignores some important
numbers thus making it just a decent gauge when comparing profitability amongst companies or
industries. Southwest comes in with a healthy 4.58 billion EBITDA number but this lags a few
of its main competitors. For instance, Delta (9.64B) and American Airlines (7.10B) both look
more profitable in this regard. Having a positive EBITDA is a good thing; however it shows a
weakness when looking at its rivals. The remaining look into its financial situation will paint a
better picture as to how big of a weakness this might or might not really be.
Looking at the numbers from 2015, Southwest is showing signs of strengths and
weakness in a number of growth statistics. First, the overall sales (revenue) numbers of 5.3%
came in clearly ahead of the industry average which had negative growth of 1.95% during 2015.
Taking a comparison over the past 5 years however, shows that Southwest is behind the industry
in rate of growth by almost 19%. This could be because others have made financial strides over
that timeframe, while Southwest has held a steady course of financial strength. But from a profit
standpoint, Southwest is showing impressive growth, it is just at a slower rate than the
competition with net income growth of 92% versus the industry at 233.24%. Clearly there was
some sort of unknown factor creating this discrepancy over the past year. Over the previous 5
years however, the industry as a whole grew its net income by only 9.31% as compared to
Southwests 36.6%. This proves that the airline has remained profitable and shown the ability to
grow over time. Another indicator of financial strengths that Southwest has had comes from its

SOUTHWEST AIRLINES

21

dividend growth rate. They have increased dividend payouts to shareholders by 73% over the
past 5 years. With the industry only showing dividend growth of 66% over that same time.
Return on equity is a valuation of how profitable a company is by measuring how much
the shareholders earned for their investment. Analysts look for a ROE somewhere around 15%
to 20% to signify a quality investment. Southwest lives up to that standard 32.75% but
compared to the industry at 51.31%, appears not as appealing as others. That is over a 60%
lower ROE as compared to the competition. The 5 year number shows the company trailing at
about the same rate, 13.3% versus 26.65% from the others. Now the ROA or return on assets
shows that the management has not done a great job of utilizing its assets over the past year. The
11.27% number and even the 4.7% on a 5 year basis are right in line with the rest of the airline
industry averages. The asset turnover is in line with the industry and is probably the nature of
the business, but comes in just under 1%. The income generated per employee by Southwest is
46.9k versus 38.4k which is about 21% higher than the industry average. As sign the
management has utilized its most prized assets to a greater efficiency than most.
Southwest has been a profitable company for the past 43 years. It is the model of a
financially efficient company by leading the industry in almost every profitability ratios. With
gross profit margins of roughly 71% the company is able to retain $0.71 from each dollar of
revenue generated, while the industry is averaging only $0.61. Net profit margins were positive
by roughly 12% but showed 1% lower as compared to the industry. On a 5 year basis however,
Southwest has continued to lead the industry, which should tell management that its model is
working efficiently. The numbers presented by the company are also a great sign for those who
may be looking to invest in Southwest, as the net profit margin is the most used metric when
making financial projections.

SOUTHWEST AIRLINES

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Ratio Analysis

The debt/equity ratio looks at a companys leverage situation by analyzing the

proportions of debt and equity financing that a business employs. If there were any questions
over Southwests financial position, lets end that right now. Southwest has a Debt/Equity ratio
of only 0.32 versus the 1.13 industry average. As the numbers show, they have taken on very
little debt as compared to its rivals and thus prove to have a lot lower risk to creditors and
investors. Does Southwest have the ability to pay off its liabilities in the short term? Lets
examine the current and quick which provide the details. In line with the industry average,
Southwest has a 0.57 ratio compared to 0.59 within the industry. Normally a ratio under 1.00
would suggest a company would be unable to meet its obligations, however a total liquidation
event seems unlikely. Seeing such a weak number, Southwest should work to increase its short
term assets on hand to improve its liquidity. They should strive for a better cushion of around
2.0 or higher. The quick ratio appears to be much the same as the current ratio at 0.50 versus
0.46 of the industry average. It would not suggest that sales of any inventory are needed to meet
its obligations. The leverage situation for Southwest is very favorable and its strength would
keep the company out of serious risks in the event of an economic downturn. The leverage ratio
of Southwest is only 2.87 as compared to 4.72 in the industry. The lack of leverage by
Southwest keeps the interest coverage at a staggering 48.56 as opposed to the industry at 9.12.
This is a major strength that shows there is absolutely no danger in the company missing any
interest payments to its creditors.
Short term capital
For short term capital, Southwest should use its lack of leverage and finance through
short term debt instruments like commercial paper and loans. The debt to equity ratio shows

SOUTHWEST AIRLINES

23

Southwest as a low risk to the creditor providing the capital. Morningstar has the credit rating of
BBB+ for Southwest based on history of financial performance (Morningstar, 2016). These
methods can be used to satisfy short term obligations like payroll short comings and replenishing
supplies.
Long term capital
Southwest had a number of different ways to obtain long term capital needs. These could
include, new inventory (such as airplanes), or expansion projects into markets not previously
explored. In order to finance in this way, Southwest could issue corporate bonds, use a common
or preferred stock offering out to the general public.
Working capital
Southwest does not have sufficient working capital. Currently, its working capital is a
negative $3.4 billion dollars, a number that continues to weaken over the past five years. This
factor would force Southwest to seek one of the above financing options for any possible
investment into growth of its future operations as will be seen during the strategic
implementation process.
Additional Analysis
Southwest Airlines has very good capital budgeting procedures. Its evidenced by the
financial ratios in comparison to the industry overall. Being in the airline industry, its low Debt
to Equity ratio shows Southwests lack of taking on debt which confirms good capital budgeting.
This will be a useful tool when it comes time for it to implement one of the suggested strategies.
Since 2010, Shareholder value has increased more than 3 fold; dividends per share have
increased more than 16 fold; and $4.3 billion has been returned to shareholders in dividends and
share repurchases (Southwest One Report, 2015). This proves to support its outstanding

SOUTHWEST AIRLINES

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relationship with the investors and stakeholders of the company. Southwest is led by six
executive level officers that all hold over 10 years seniority with the company.
TABLE 2: Quantitative Strategic Planning Matrix (QSPM)
Key Factors

Add In-Flight
Services

International Expansion

Priority Seating Options

AS

AS

AS

Opportunities

Weight

TAS

TAS

1.International Expansion

0.12

0.36

0.48

0.24

2. New Technology

0.05

0.20

0.05

0.20

3. Cheap Fuel

0.04

4. Addition of 1st Class

0.10

0.30

0.20

0.40

5. Air Travel Growth

0.03

0.09

0.12

0.09

6. Domestic Expansion

0.06

7. Mergers or Acquisitions

0.10

0.10

0.30

0.10

1. Weak Economy

0.12

0.12

0.36

0.24

2. High Energy Costs

0.09

3. Terrorism

0.08

4. New entrants

0.01

5. Government
Regulations

0.05

6. Existing Competition

0.07

7. Rising Labor Costs

0.05

8. High Speed Rail System

0.03

TOTAL

1.0

TAS

Threats

0.28

0.21

0.28

Strengths
1. Superior Financial
Position

0.12

0.36

0.48

0.36

2. Brand Image

0.10

0.20

0.40

0.10

SOUTHWEST AIRLINES
3. Largest Domestic
Network

0.07

4. Low Cost Structure

0.09

5. Management

0.10

6. Southwest University

0.05

7. Fuel Conservation
Program

0.03

8. Boeing 737-800 planes

0.03

25

0.36

0.18

0.27

Weaknesses
1. Limited Seating
Choices

0.11

0.11

0.11

0.44

2. International Presence

0.07

0.14

0.28

0.14

3. In-Flight Entertainment

0.09

0.36

0.18

0.18

4. Practices Are Being

Copied

0.03

0.09

0.03

0.09

5. Flight Booking
Limitations

0.06

6. Unionized Employees

0.05

TOTAL

1.0

3.07

3.38

3.13

Strategy Selection
Three strategic alternatives are being suggested for Southwest Airlines in its quest to
continue on the path of a profitable airline. The first is to add in-flight options to enhance the
experience with current customers. Next the suggestion of expanding operations into further
long haul international markets was made. Lastly, Southwest is one of the only airlines that
doesnt have a priority seating section on its aircrafts, so that is being recommended as well.

SOUTHWEST AIRLINES

26

The addition of in-flight entertainment was chosen because currently the choices that
Southwest offers are severely limited. A lot of people today have the desire for more technology
in the fast pace world that we live in. Most flights consist of forty five minutes or longer, it is
safe to assume that having some sort of entertainment would cater to the masses. Competition in
the industry is far ahead of Southwest when it comes to this service. Not only does this bring
more appeal to the consumer, it can be managed so that it brings in additional revenues to the
airline. According to the QSPM, this choice came in as the least likely scenario (3.07).
Expansion into international markets was another strategy recommended for Southwest.
Studies have shown that the demand for travel by air is only going to continue to rise into the
foreseeable future according to PwCs annual report which claims air travel will likely double
by 2035 (Jones, 2015). Southwest has just recently explored a handful of international
destinations on its platform. This can be implemented by either a joint venture or merger with a
foreign airline, or by simply using its own resources to expand into foreign markets alone. A
number of the firms strengths can be leveraged to make this strategy work. This proved to be
the best alternative on the QSPM (3.38) and will be the recommended strategy to the board.
Lastly, Southwest is the only airline that was found to not offer assigned seating. Now
maybe this caters to some, but this presents an opportunity to bring in new consumers who were
opposed to that setup as well as capture a new business traveler. At current, Southwest offers
for a small fee, priority boarding, which mean you have the right to board the plane before others
and assures you a better seat selection of your choice. A thorough analysis of the markets
currently being flown could identify which routes might best be served with this new business
class. The strategy is not one that needs to be put in place all at once, but started by updating
some of the current plane cabins or when new jets are purchased. Flights to larger cities such as

SOUTHWEST AIRLINES

27

New York, Chicago, or Denver would be destinations that first receive the changes. This
approach received the second highest weighted score of (3.13) which slightly bested adding
entertainment features.
Southwest is already a leader in the airline industry, however to keep its place at the top
requires businesses to constantly adapt to their surroundings. Its model is currently working for
them, but with time and no innovation or change, the competition will close the gap and possibly
overtake them. The alternative strategies recommended were aimed at bringing on new
innovation and enhancing the experience of the current customer while looking towards the
future of the company.
Strategy Recommendation
Establishing new markets in areas such as Europe and Asia is recommended to continue
the growth of Southwest as it looks towards its goal of being the most flown airline. Only within
the last two years has it begun to expand operations into other countries. The opportunity exists
to leverage its current standing in the airline industry and take advantage of this large scale
prospect that will take Southwest to the next level and become a leader in global travel.
Southwest will implement a market development strategy in order to achieve its desired
results. The current business model shows that it can achieve these goals as they have been a
profitable company for the past 43 years of business. Southwest is in a position to begin this
endeavor before its major competing airlines follow suit and while the global market is relatively
untapped by other US companies.
The recommended strategy to establish markets in Europe and Asia play into the
strengths and opportunities of Southwest. The biggest opportunity for the company was
international expansion because of the predicted rapid growth of global air travel. The strong

SOUTHWEST AIRLINES

28

brand appeal and financial strength can deliver the necessary resources needed in order to make
this strategy successful. The low cost model should appeal to the cost conscious traveler who
may not currently have a better choice. Developing these markets will also address the
weaknesses of not having an international presence and make it harder for the other low cost
carriers to continue to copy their model. Stretching its reach into new economies can form a
hedge against the threat of a potential weakening US economy by forming a new revenue stream
to keep them financially solid in challenging times.
Annual Objectives

Increase revenues by minimum 10% annually

Capture 30% of global market share by 2018

Strategic Implementation Plan

Southwests business strategy helps it to differentiate itself from the other airlines. It sees
itself as attracting new passengers to air travel, rather than competing with other carriers for
existing travelers. Since Southwest faces threats to its continuing success, that plan has to be
adjusted to be able to stay ahead of the competition. To accomplish this, it is recommended that
Southwest expand its operations substantially into international markets. The goal is to bring its
low cost business model to new markets and carve out a new untapped niche for them. The
recent successful merger with AirTran only scratched the surface of what is possible in the
international markets and can be used as a guideline for the expansion. This strategy cannot be
taken lightly however; as there are a number of factors that had to be thoroughly accounted for
during the planning stages in order to implement this major change successfully. All areas of
Southwest will be affected to some extent, but the focus here will be on the roles marketing,

SOUTHWEST AIRLINES

29

financing and operations which includes research and development, human resources and MIS.
The following will represent each departments role in the expansion plans.
Marketing

Identifylanguageandculturalbarriers

Createadvertisinginvariousformsthatadheretothenewcustomerbase

Financing

Obtainfinancingmethodfortwonewterminalconstruction

Obtainfinancingforthemarketing/advertisingrollout

ObtainfinancingfornewBoeing737MAXpurchases

Developbudgetforprojects

Operations
Research & Development

Integralpartofcreatingthespecsoftwonewterminalsatinternationalairports

Specificationmodificationstothenewfleetofplanestoaccommodatelonghauls

Human Resources

Renegotiatepilotagreements/contractswithunion

Performduediligenceonrulesandregulationstobeinternationallycompliant

Responsibleforallhiringnewemployeesassociatedwiththeexpansionplan

ResponsibleforobtainingFAAapprovalsforinternationalflight

MIS

Performingnetworkoptimizationandintegration

Creatingnewreservationsystems

SOUTHWEST AIRLINES

30
Marketing

The marketing team for Southwest is going to have one of the most challenging functions
as they move towards the international expansion. The first order of business will be for a global
campaign manager is appointed to oversee all efforts. A major hurdle that will be faced is
identifying the language and cultural barriers that exist. Once those have been identified,
marketing can begin creating advertising of the new services through various channels such as
radio, social media and print materials to the end targets. The process should start by the team
researching the local markets in the new countries to see what is working versus what is not and
building upon the findings. A suggestion would be to hire a local marketing firm to assist in the
efforts.
As everything is being developed, an important factor for the marketing team is making
sure they remain consistent to the Southwest brand and its strong image. The group will
continue to market the rollout to international markets with aggressive social media campaigns
that will spread the Southwest message to those who are currently unfamiliar. The budget for
this campaign is estimated to be around $62 million.
Operations
Since Southwest is a company that offers a service versus a product, the research and
development team will have two main responsibilities during implementation. First, they will be
managing the specifications needed in the new planes that are being purchased from Boeing to
accommodate long haul trips. Lastly they will be responsible for providing all of the input
needed with regards to the construction of the two new terminals, London Heathrow Airport &
Beijing Capital International Airport.

SOUTHWEST AIRLINES

31

Flying internationally will be a new strategy for Southwest who had previously stayed
away from long haul flights. In 2013 Southwest launched its first of 60 new 737 MAX 7
airliners purchased from Boeing (Customer highlights, 2016). In preparation the new longer
distance flights, the R&D team will work with Boeing to customize half of the fleet or 30 planes
to have amenities that are not seen on its domestic airplanes. When traveling longer distance, it
would make more sense to have planes with accommodations such as extended leg room, further
reclining seats and better in-flight entertainment such as television screens that flip down from
the ceiling. These are the types of modifications that the team will work with Boeing to
implement on. The estimated cost of the needed modifications to the planes is around $480
million at about $16 million per plane.
Development team will also handle the specifications pertaining to the construction of
Southwests two new international terminal locations in London and Beijing. These
destinations were selected in the planning process due to their airport size and capacity as well as
number of passenger flights traveled annually. This part of the project will have to be handled
by third parties as Southwest does not own its own construction company. Both terminals have
been projected to cost around $512 million each for a total cost just over $1 billion dollars
One of the first and main tasks that will need to be accomplished is the team obtaining
any and all FAA approvals for international flight. Here the team will work closely with the
human resources group who is conducting the due diligence in regards to adhering to all rules
and regulations for dealing abroad. The efforts of the marketing phase is anticipated to cost
Southwest around $25 million.
After approvals are received, Southwest will have to address the adding of international
routes to its pilots job requirements. It is estimated to affect nearly one quarter of its current

SOUTHWEST AIRLINES

32

pilots or about 2075. This results in renegotiating the current contracts with the Southwest
Airlines Pilots Association. Negotiations for this new task will ultimately result in increasing
compensation to the pilots. To keep the expense lower, instead of a large pay increase,
Southwest will offer other incentives such as additional vacation time and a profit sharing bonus.
The cost of the pay increase is estimated to cost around $10 million.
When looking to employ individuals in a different region, there are a number of laws,
regulations and norms that must be met, some of which are far different from those in the U.S.
and which may present a challenge for Southwest. The team leading the hiring efforts will be in
charge of working with local hiring agencies to address these concerns. The marketing team will
also be employed to advertise for the upcoming job openings. The process will conclude with
individuals being chosen that will best suit the Southwest culture. A smaller scale version of the
infamous Southwest University training facility will be used to complete the transition of the
new hires. The hiring expense is estimated to be around $15 million up front.
MIS
When extending their reach overseas and across borders, there are a number of issues
concerning the expansion of its technology systems that Southwest will have to face as well. The
primary technological concern in expanding into foreign markets is in finding a way to centralize
these systems so to best serve all the branches being developed worldwide. The goal is to
implement additions to the current IT systems that will allow the retention of domestic data as
well as integrating new international data without interruptions in service. The technology team
has already spent countless hours in testing the enhancements to the current system and is
comfortable in its results so far. The system will be ready for rollout upon implementation date.

SOUTHWEST AIRLINES

33

The last project for the MIS team will be the creation and introduction of a new online
reservation system. The new user interface will optimize reservation as well as airport staff
efficiencies which should result in expedited customer service. The new service will enable
multiple forms of payment of local and international payment options including credit card,
PayPal, e-bank, etc. The cost for the MIS projects came in at $85 million which is fairly steep
but should reduce overall costs down the line for Southwest and allow for a smooth transition.
Financing
The finance team has the unfortunate job of finding out how Southwest is going to pay
for the implementation of this strategy. In order to finance this extensive project, Southwest
finance team will develop the budget to satisfy the financial requirements. A large portion of the
expense can come from internal funds that have been set aside but the remainder will need some
sort of outside source. Management has determined that cost of this strategy will be $1 billion.
The company used an EPS/EBIT Analysis to determine the best method for financing the
project. The options explored were to take on more debt by simply borrowing the money
needed. Another choice is to raise the needed funds by selling additional shares in a secondary
offering, or to look at doing a combination of the two methods. The company will examine the
results during normal economic conditions, times of a booming economy and also during a
recession. The table below will show the results of the analysis based on the following
assumptions used:

AmountRequired$1billion

EBITRange$3.5b$4.5billion

InterestRate5%

TaxRate37%

StockPrice$47.5

#ofsharesoutstanding=661million

SOUTHWEST AIRLINES

34

Table 3: EPS/EBIT Analysis

CommonStockFinancing
Recession
Normal
Boom
EBIT
3,500,000,000 4,000,000,000 4,500,000,000
Interest
0
0
0
EBT
3,500,000,000 4,000,000,000 4,500,000,000
Taxes
1,295,000,000 1,480,000,000 1,665,000,000
EAT
2,205,000,000 2,520,000,000 2,835,000,000
#ofshares 682,164,021 682,164,021 682,164,021
EPS
3.23
3.69
4.16

DebtFinancing
Recession
Normal
Boom
3,500,000,000 4,000,000,000 4,500,000,000
50,000,000
50,000,000
50,000,000
3,450,000,000 3,950,000,000 4,450,000,000
1,276,500,000 1,461,500,000 1,646,500,000
2,173,500,000 2,488,500,000 2,803,500,000
661,000,000 661,000,000 661,000,000
3.29
3.76
4.24

70%Stock30%Debt
Recession
Normal
Boom
EBIT
3,500,000,000 4,000,000,000 4,500,000,000
Interest
15,000,000
15,000,000
15,000,000
EBT
3,485,000,000 3,985,000,000 4,485,000,000
Taxes
1,289,450,000 1,474,450,000 1,659,450,000
EAT
2,195,550,000 2,510,550,000 2,825,550,000
#ofshares 675,814,814 675,814,814 675,814,814
EPS
3.25
3.71
4.18

70%Debt30%Stock
Recession
Normal
Boom
3,500,000,000 4,000,000,000 4,500,000,000
35,000,000
35,000,000
35,000,000
3,465,000,000 3,965,000,000 4,465,000,000
1,282,050,000 1,467,050,000 1,652,050,000
2,182,950,000 2,497,950,000 2,812,950,000
667,349,206 667,349,206 667,349,206
3.27
3.74
4.22

The conclusion of the EPS/EBIT analysis found that the best option for Southwest to
fund its expansion through 100% debt financing. Regardless of economic condition tested, this
proved to be the most beneficial to the bottom line. Getting the most EPS out of the selection
keeps its shareholders in mind by preventing issuing new shares that would result in a dilution of
their value. Traditionally Southwest has avoided using all debt financing to fund projects but
with the size and magnitude of this expansion it was the most beneficial to the company.
The data portrayed in the following pro-forma income and balance statement shows the
effect on the books over the next three years. The project will not be fully up and running until
2017 and as such the assets and liabilities will see some downside for the ending of year 2016.
The plan is to utilize the current low cost model that management has been so successful at
maintaining in the past to maximize the potential of the new endeavor. The projections after this
year show the expansion project to be very beneficial to the company long term. Objectives are
well within reach and will keep Southwest ahead of the low cost competitors. Financing the
expansion through all debt will be favorable to the shareholders as they were not diluted by the
selection.

SOUTHWEST AIRLINES

35

ProjectedIncomeStatement

(FinancialdatainU.S.DollarsValuesinMillions,exceptpershareitems)
Year
2014
2015
2016
2017
2018

Revenues:
Sales*
CostofRevenue
GrossProfit
OperatingExpenses
Selling,generalandadministrativeexpense(SG&A)*
ResearchandDevelopment*
Totaloperatingexpenses
Operatingincome
Interest
Interestexpense*
Interestincome*
NetInterest
Incomebeforetaxes
Incometaxes*
Netincome
CommonShares*
EarningsperShare
Dividendspaid*
RetainedEarnings

18,605
7,677
10,928

19,820
6,025
13,795

21,802
6,428
15,374

25,072
6,602
18,470

28,343
6,774
21,569

5,434
0
8,703
2,225

6,383
0
9,679
4,116

7,445
0
12,141
5,163

8,041
0
13,598
5,783

309
0
100
1,816
680
1,136
687
$1.65
$2.90
$4.86

556
0
81
3,479
1,298
2,181
661
$3.30
$3.17
$5.84

6,894
0
10,840
4,610
0
623
0
91
3,628
1,363
2,265
661
$2.76
$3.20
$5.06

697

781

102
4,001
1,431
2,570
605
$3.62
$3.23
$5.78

114
4,172
1,503
2,670
605
$4.01
$3.27
$6.27

2014

Year
2015
2016

2017

2018

2988
365
342
0
3927

3051
474
311
0
4024

2134
480
371
0
3604

2347
516
358
0
3894

2582
551
388
0
4040

14292
8221
233
1333
0
19723

15601
9084
319
970
0
21312

16285
10074
391
984
0
22164

16882
10153
491
1024
0
23051

17021
10172
535
1013
0
23973

1284
258
5923
2627
598
12948

1188
637
7406
2706
855
13954

84
65
7823
2922
923
15070

94
79
7979
3156
997
16276

80
0
8139
3409
1077
17578

808
7416
6775
9209

808
9409
7358
9899

840
9879
7726
10196

840
10373
8112
10502

821
10892
8518
10817

ProjectedBalanceSheet
Assets
Cashandcashequivalents*
Accountsreceivable*
Inventories*
Deferredincometaxes*
Totalcurrentassets
Fixedassets
Cost*
AccumulatedDepreciation*
Netfixedassets
Goodwill*
Otherassets*
Totalassets
Liabilities
Accountspayable*
Currentdebt
Totalcurrentliabilities
Longtermdebt*
Otherlongtermliabilities*
Totalliabilities
Shareholders'equity
CommonStockandAdditionalPaidinCapital*
RetainedEarnings*
TotalShareholders'Equity
Totalliabilitesandshareholders'Equity
Source:MSN.com

SOUTHWEST AIRLINES

36
Conclusion

In conclusion, Southwest needs a strategy to keep it ahead of the competition. The most
beneficial way to achieve its goals is to look globally. The other alternative strategies would
only help to draw more interest to the company in the domestic markets. There is an ever
growing market in global air travel. Southwest should use its expertise and strong financial
situation to take advantage of this great opportunity. This doesnt come without its challenges
but this move will push Southwest into the future it deserves. With the proper planning,
research, marketing and financial plan, this should have no problem succeeding.