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Professional Summary

In 2009 Gary Kelly, the CEO of Southwest airlines, was considering what it will take to get Southwest to outlive the economic downfall, as a result of high essential oil prices and decline in demand, that was upon the airline market. One may argue that in the face of many options Freebie southwest both diversified in there alternatives as well as stayed at true to the brand they had made. We will certainly argue they were doing both. They branched out in terms of expansion and customer service, while remaining faithful to their company in terms of administration style and their online existence, or digital strategy. Introduction

This case examine is the account of a small regional aircarrier carrier making use of southwest beliefs to become a major industry push. Southwest flight companies began it is business nearly 40 years in the past in Dallas, Texas. Out of your ashes of any regional aircarrier fight, Freebie southwest airlines flourished by applying their two important goals of simplicity and low costs. In 2009 (the time this situatio study was published), South west Airlines experienced decreasing profits due to the economical housing/lending turmoil, but was faring much better than many of its competition. The 2009 10-K for South west Airlines does not list the direct opponents of the business. However , Yahoo's financial internet site lists a number of Southwest's current competitors: Delta flight 1921 (DAL), Plane Blue (JBLU), and Combined Continental Cooperation (UAL). Freebie southwest Airline's total revenues pertaining to FY09, FY08, and FY07 were $10, 350MM, $11, 023MM (11. 55% growth), and $9, 861MM, respectively. A large percentage of these fluctuations in revenue can be explained with regards to passenger fares with FY09 average passenger fares of $114. 61, FY08 of $119. sixteen, and FY07 of $106. 60. Because the economy became popular from 2007 to 08, so do the prices which likewise increased South west airlines total revenue. The contrary holds true as we entered the deepest areas of the downturn in 2009, and average costs declined. South west airlines also has positive net income, which is unlike many of it is competitors. View the table below for additional particulars: Table one particular

Southwest's Essential Information

Southwest (LUV)

FY09

(in millions)FY08

(in millions)FY07

(in millions)

Revenue$10, 350$11, 023$9, 861

Operative. Expenses$10, 088$10, 574$9, 070

Net Income$99$178$645

Cash$1, 114$1, 368$2, 213

Acct Rec$169$209

Inventory$221$203

CapEx$585$923$1, 331

Southwest's competitors were on the move in FY09. To get a better concept of the competitive landscape, the table beneath shows a listing of revenue, functioning expenses, net income, cash, accounts receivables, inventory, capital expenses, and total cash flow. Desk 2

Southwest's Competitor's Important Information

Delta (DAL)JetBlue (JBLU)United (UAL)

FY09FY08FY07FY09FY08FY07FY09FY08FY07

Revenue$28, 063$22, 697$13, 358$2, 928$3, 056$2, 636$16, 335$15, 337$15, 254 Op. Expenses$28, 387$31, 011$12, 562$3, 007$3, 279$2, 673$16, 496$24, 632$19, 106 Net Income($1, 237)($8, 922)$314$58($85)$12($651)($5, 396)$360 Cash$4, 607$4, 225$896$561$3, 042$2, 039

Acct Rec$1, 353$1, 513$81$86$743$714

Inventory$327$388$40$30$197$237

CapEx$1202$1522$828$434$654$617$317$475$723

From the table above, Delta could increase earnings during the recession through the acquisition of Northwest airlines. However , it did continue to decrease functioning expenses, inventory and capital expenditures. Airline operating expenses are linked to personnel also to a large percentage jet energy, inventory is associated with spare parts and repair required to assistance the airplanes, and capital expenditures in many cases are the acquisitions of new airplanes. In FY09, Delta Airlines was engaged in a lot of alliances with international and domestic service providers to improve industry penetration and cooperation of frequent flier mileage courses. Financially, Delta has decreased capacity and is interested in concluding the combination with Northwest. JetBlue, alternatively, is a smaller regional...

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