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Recommendation to purchase Southwest Airlines - Research Paper Example

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In the present global economic turmoil, the perception of the general public towards the airline business has been rather negative as most carriers continue to post huge losses. The present industry, especially in the context of the United States consists of major carriers such…
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Recommendation to purchase 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 is operating currently with over $18 billion debt in its balance sheets. During the concluding financial 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 tersm 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 has 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 ...Download file to see next pagesRead More
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