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Accounting aspects of Southwestern Airlines - Essay Example

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In 1966 Kelleher was practicing law in San Antonio when a customer named Rollin King wished-for starting a short-haul airline like California-based Pacific Southwest Airlines.The airline would fly the "Golden Triangle" of Houston, Dallas, and San Antonio and by staying within Texas, avoid federal regulations…
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Accounting aspects of Southwestern Airlines
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Download file to see previous pages In 1966 Kelleher was practicing law in San Antonio when a customer named Rollin King wished-for starting a short-haul airline like California-based Pacific Southwest Airlines.The airline would fly the "Golden Triangle" of Houston, Dallas, and San Antonio and by staying within Texas, avoid federal regulations. Kelleher and King formed a company, raised initial capital, and filed for regulatory approval from the Texas Aeronautics Commission. Regrettably, the other Texas-based airlines, namely Braniff, Continental, and Trans Texas, opposed the idea and waged a battle to prevent Southwest from flying. Kelleher argued the company's case before the Texas Supreme Court, which ruled in Southwest's favor. The US Supreme Court refused to hear an appeal filed by the other airlines. In the late 1970s, it looked as if the company could begin flying.''Southwest then began building a management team, and the purchase of three surplus Boeing 737s was negotiated. In the meantime, Braniff and Texas International continued their efforts to put off Southwest from flying. The underwriters of Southwest's initial public stock offering withdrew, and a restraining order against the company was obtained two days before its scheduled inaugural flight. Kelleher again argued his company's case before the Texas Supreme Court, which ruled in Southwest's favor a second time, lifting the restraining order. Southwest Airlines began flying the next day, June 18, 1971' (Freiberg & Freiberg, 1996).

Southwest Airlines: An Introduction
Southwest Airlines has always been thriving in terms of productivity, good employee and union relations, and customer satisfaction at a time when most airline carriers are besieged in all these areas. Crucial to the company's hallmarks is its culture of flexibility and family-orientation.

Herb Kelleher summed up the Southwest culture and commitment to employees:

'We don't use things like TQM. It is just a lot of people taking pride in what they're doing. You have to recognize that people are important. How you treat them determines how they treat people on the outside.. I give people the license to be themselves and motivate others in that way. We give people the opportunity to be a maverick. You don't have to fit in a constraining mold at work-you can have a good time. People respond to that' (Lancaster, 1999).

Despite the fact that 90% of Southwest employees are unionized, labor relations have been surprisingly positive, especially by industry standards. There are no official structures for labor or union participation in management administration; nevertheless the company led by top managers who vigorously seek out and respond to employee views has taken the lead on developing and maintaining this culture. 'One significant base of the company's achievement in a rather unsteady industry is the fact that the unions are not involved in pushing their roles beyond the conservative collective bargaining and grievance functions they perform. In this regard, Southwest differs from some other renowned cases of Human Resource-based and customer-oriented success stories' (Kochan, 1999).

Southwest Airlines: Its Accounting Aspects
The September 11 incident pushes the airline industry into economic turmoil, resulting in unemployment, insolvency, and the prospect of fragile prospects. Soon after the September 11, most major airlines announced sharp service reductions, grounded aircraft, and laying-off of employees. Yet 'during the first decade of deregulation, more than 150 carriers, many of them start-up airlines, collapsed into insolvency. Eight of the 11 major airlines dominating the industry in 1978 ended up filing for bankruptcy, merging with other carriers, or just disappearing from the radar screen. All together, the industry made enough money during this period to buy two Boeing 747s.' (Dempsey, 1984). ...Download file to see next pagesRead More
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