Southwest Airlines

Essay by EssaySwap ContributorUniversity, Master's February 2008

download word file, 6 pages 0.0

?Southwest Airlines has always been a little bit different. Its airplanes have been painted to look like whales. Its flight attendants for years had to wear hot pants when conservative suits were the industry norm. Its pilots are routinely expected to help clean the cabin on busy days.

All this has been about charming enough passengers to establish Southwest as the world's biggest low-cost carrier. There was a time when this made Southwest a maverick - an alternative to the full-service carriers most passengers fly. Now it sits squarely at the heart of the industry and is leading the fight for survival that airlines have been engaged in since the terrorist attacks of September 11. Southwest has spent three decades - it celebrated its 30th birthday in June - working to be as productive as possible to offer the industry's lowest fares. Its competitors are being forced, in a matter of weeks, to adopt that same business model just to stay in the air.

Southwest has not escaped the drastic drop in airline traffic, of course. Its net income in the third quarter fell by 18 per cent to $151m. Its results were helped by a pre-tax gain of $169m - the first tranche of the carrier's cut of the $5bn emergency aid the Bush administration has given US airlines. Gary Kelly, chief financial officer, says the price war in the US market has pushed the carrier into a loss this quarter. Although the number of passengers has been rising in the past month, he says yields would have to rise by 10 to 12 per cent to push Southwest back into profit.

However, Southwest is the only big US carrier that has not made employees redundant. Analysts believe it is the only one with a chance of...