Southwest

Over the past 3 years, Southwest Airlines' financial performances have been relatively

consistent. In 2000, they were generating revenues of $5.6 billion, which was an increase of

almost $2 billion from 1999. In 2001 and 2002, their revenue was around $5.5 billion. Their net

income in 2000 was $625 million and has decreased each year to $511million in 2001 and $241

million in 2002. Their operating expenses have increased over the last three years. In 2000

they spent $4.6 million. In 2001 they spent $4.9 millions and in 2002 they spent roughly $5.1

million. The share price of Southwest has been decreasing over the past couple years.

Currently the stock is trading at $14.70. The highest it was trading at was $22.30 in December

of 2000.

Problems and Opportunities

Some of the problems that Southwest faces are that they will receive increased pressure from

new-entry competitors like JetBlue and AirTran Holdings. JetBlue may be on to something big to

gain competitive advantage as they are trying to provide more amenities in their planes--such

as assigned seating and televisions in the seatbacks of its thirty-seven planes. Another

problem that Southwest is going to face is the airport security hassles and higher ticket taxes,

which will affect Southwest's short-haul routes.

Southwest Airlines does have the opportunity to increase their market share now that larger

carriers like United and U.S. Airways are bankrupt. Southwest needs to compete with the

low-cost carriers to provide more value to the customer.

Use of Information Technology

Perhaps what makes Southwest Airlines so successful is its great company attitude

and its efficient management. Southwest Airlines treats their employees like their customers as

Southwest CEO, Kelleher states, "You have to treat your employees like your customers. When

you treat them right, then they will treat your outside customers right. That has been a

powerful competitive weapon for us." This is the reason why Southwest Airlines is one of the

top 100 best companies to work for ranked by Fortune Magazine.

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