Southwest Airlines[1]

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Southwest Airlines :

Southwest Airlines Presented by: PIJUSH ROY


Overview Stocks Stock Information Industry vs. LUV Goals and Strategies History Existing Condition Their Mission and Vision Statement New Mission and Vision Statement External Opportunities and Threats CPM EFE Internal Strengths and Weaknesses IFE Analysis SWOT Matrix SPACE IE Matrix Grand Strategy Matrix QSPM Different Strategies Decisions Implementation Evaluation Update! References



More Stock Information:

More Stock Information Traded on the NYSE under LUV Last traded at 17.97 Current volume is 4,585,000 EPS: .67 Dividend yield: 10%

Industry Vs. LUV:

Industry Vs. LUV LUV = represents home at Dallas Love field, and theme for Employee and Customer Relations

Goals and Objectives:

Goals and Objectives Ensure highest quality Customer Service in the air or on the ground. Ready to help customers under any circumstances. Are there to ensure you make it from point A to point B safely To stay the most successful with low-fare, high frequency point-to-point carrier.

History of Southwest Airlines:

History of Southwest Airlines On February 20, 1968 the Texan Aeronautical Commissions approved plans to fly in 3 states, the c5eators are Rollin King and Herb Kelleher Expanded through 1980’s to 1990’s by 1993 Southwest Airlines could fly in 34 states in 15 states They also expanded into new destinations California, Northwest, Florida, East Coast The competitors could not keep up, “500 pound cockroach that was too big to stamp out: While the airfare was dropping the traffic went up tremendously, in 1994 United started a shuttle service, the large air carriers were feeding traffic into transpacific and transcontinental routes, they could not keep up In 2004 Southwest Airlines is fourth largest domestic carrier, customer boarded In 2002 they traveled in 58 cities and 30 states, it has been 13 years in a row that they are profitable, even after September 11, 2001, net income fell 52.9 percent, Southwest was the only airline company that had a profit all the other companies were in the red Was the first airline to achieve the Triple Crown, they had five difference Triple Crown dedicated to the Employees of Southwest Airlines for their excellent achievements.

Their Mission and Vision Statement:

Their Mission and Vision Statement Mission 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. To give ordinary people the opportunity to fly. To the employees We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer. Vision To have a conservative increase growth, capitalize and cutback schedules of other airlines. To continue expanding conservatively in long-haul success.

New Mission Statement:

New Mission Statement Southwest Airlines is a company that is for anyone and every that wants to get from point A to point B by flying. Our service and philosophy is to fly safe, with high frequency, low-cost flights that can get passengers to their destinations on time and often closer to their destination. We fly in 58 cities and 30 states and are the world’s largest short-haul carrier and we make sure that it is run efficiently and in a economical way. Our technology is current such as our check-ins process is faster. Striving to expand and grow in a conservative manner is key, and being financially stable by keeping quality high and cost low. Our excellence is managing cost by our rapid twenty-minute gate turnaround, a non-stop flight with our airplanes, and a more productive workforce which keeps above our competitors. We treat our employees like customers, family and motivate and compensate them for doing a job well done. We continue to be in the Fortune Magazine’s most admired companies (2 nd in 2002) 100 best companies to work for. Since 1972 we have ranked first in Money Magazines featured in “The 30 Best Stocks.” In our communities we make donations to charities to organizations and people in time of need.

New Vision Statement:

New Vision Statement Our vision is to expand our locations both domestic and overseas by being the largest and most profitable airline company to achieve both short and long-haul carriers efficiently and with low cost. Also to be an airline carrier that has the most productive workforce to guarantee the best flight possible for each and every passenger.

External Opportunities and Threats:

External Opportunities and Threats Opportunities First airline on the web Only in 58 cities – expansion to other cities Lowest cost-preavailable-seat out of all airlines Booked online 13.6% more than American Airlines Top-ranked website in customer satisfaction among travel sites Threats JetBlue Global tensions post 9/11 Competitors caught SW strategy New Tax System New Security measures Aviation insurance costs Terrorists Attacks Severe decrease in customer air travel





Internal Strengths and Weaknesses:

Internal Strengths and Weaknesses Strengths Best low-fare carrier Triple Crown for annual performance Quickly seize a strategic opportunity when arises “Team Spirit” Employees come 1 st not customers Made 20% of flights to one stop Even though Unionized still negotiate flexible work hours Marketing on the web, 50% revenue from online booking Weaknesses Conservative Growth Tactics Cuts cost in customer service areas Not subscribed to centralized reservation service Other Co.’s now using same management strategies since found out about SW Airlines Provides service in only 58 cities



Key Ratios:

Key Ratios Profit Margin: 7.23% Return on Assets: 4.01% Return on Equity: 8.98% Revenue: 7.58B Gross Profit: 2.49B Operating Cash Flow: 2.23B Market Capital: 14.41B Current: .941 Debt to Equity: .299 Total Debt: 2.00B

SWOT Matrix:

SWOT Matrix

SPACE Matrix:

SPACE Matrix

IE Matrix:

IE Matrix


GSM Market Development Market penetration Product Development Forward Integration Backward Integration Horizontal Integration

Possible Strategies:

Possible Strategies Expand into more cities Increase amount of shorter destination flights into the larger airports Increase direct flights Purchase bigger planes Get agreements with Airports for flights Eventually look to acquire American Airlines




Decisions Based on QSPM, the best looking strategy would be to expand into more cities The longer non-stop flights have more of a competitive market and would be hard to keep low cost flights


Implementation Increase The number of flights per day by 5% Increase revenue by 15% Helps to cover new increasing cost Flights into larger airports Decrease Operating costs by 10% Flights to cities with more than 4 flights a day


Evaluations Quarterly reports Average daily flights Average passenger per flight Quarterly meetings to evaluate current plan and make necessary changes as needed


UPDATE!! Expanded into 63 cities as of 2006 Operates over 2,800 flights per day


References Strategic Management Concepts and Cases 10 th Edition

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