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Prospect of Buying Southwest Airlines - Case Study Example

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The paper "Prospect of Buying Southwest Airlines" states that driven by the notion that customers can be attracted without forcing them to consider any expensive options has worked wonders for the company and has helped it step the toes of many other bigger airlines…
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Prospect of Buying Southwest Airlines
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Download file to see previous pages It is not long ago in 2002, when United Airlines, in the wake of the downturn resulting from the September 11 attacks, was forced to file for bankruptcy. Further, American airlines are operating currently with over $18 billion debt in its balance sheets. During the concluding fiscal year, the three biggest airlines in the United States have posted combined losses to the tune of $15 billion. This is huge considering the millions of money belonging to shareholders, which is at stake (Kevin Freiberg, 2006).
In contrast, Southwest airlines have earned a profit of $178 million in 2008, although this figure is substantially less in comparison to the preceding year (decline by 72.4%). As such, the airline happens to be one of the few airlines to post a profit despite the problems being faced in the sector. this puts its profit at a much larger margin than the performances of all the other airlines put together. In terms of passenger traffic, the airline boarded more than $88 million passengers, a figure which has not been surpassed by any other airline, as per the figures from the Department of Transportation. However, it must be pointed out that Southwest is still placed 7th in terms of revenue with close to $11 billion in 2008 (Charles OReilly, 2005). When considered in terms of its fleet size, southwest emerges the front runner and is capable to carry more passengers especially when including even its overseas routes. All along, especially since the period after the terrorist attacks in 2001, industry analysts have been constantly questioning whether Southwest would be in a position to maintain its upward trajectory. However, it must be recognized that despite the recent decline in sales, Southwest is among the very few airlines that have posted a profit when other carriers are experiencing both decline in sales as well as passenger volumes (Kevin Freiberg, 2006).
It is, therefore, no surprise that Southwest has time and again managed to be included in Fortune magazine’s top ten list of most admired companies alongside respected names such as General Electric and Microsoft.  ...Download file to see next pages Read More
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