American Airlines acquisition
Southwest Airlines in 2010: Culture, Values and Operating Practices
1. Has the AirTran acquisition make good strategic sense for Southwest?
For the past 40 years Southwest Airlines has been known as the market share leader in domestic flight travel in the United States. The company has always been known for excelling in differentiating themselves among other low-fare carriers by providing a reliable product and an excellent customer service. Moreover, Southwest has also proven to be a profitable company ever since 1973, and is also one of the most recognized airlines in the world for its commitment to performance, people, and planet.
After analyzing Southwest overall strategy, I believe that the AirTran acquisition has been not only a good strategy, but it seems to be the best one that Southwest has put into place. After the acquisition, the company had 685 aircrafts available to operate and serve more than 100 locations; it now has more than 100 million users and 43,000 employees. The reasons why I believe that the acquisition was beneficial and a good strategic move for Southwest are: they were able to acquire a competitor and therefore grow their business by acquiring new resources, procedures, capabilities and knowledge from AirTran.
The acquisition will also allow Southwest to expand their route networks and to serve major airports such Hartsfield-Jackson in Atlanta as well as Mexico and the Caribbean. Also, this strategic move will allow Southwest to be even more profitable they estimated that the acquisition would generate over $400 million after the complete integration of both companies. Lastly, another benefit of this acquisition is that they will be able to continue the expansion of their “Southwest Effect” which involves bringing in more competition, providing lower fares and stimulating passenger traffic.
2. What strategic issues and problems did Gary Kelly and Southwest executives need to address as they proceeded to close the deal with
1. Has the AirTran acquisition make good strategic sense for Southwest?
For the past 40 years Southwest Airlines has been known as the market share leader in domestic flight travel in the United States. The company has always been known for excelling in differentiating themselves among other low-fare carriers by providing a reliable product and an excellent customer service. Moreover, Southwest has also proven to be a profitable company ever since 1973, and is also one of the most recognized airlines in the world for its commitment to performance, people, and planet.
After analyzing Southwest overall strategy, I believe that the AirTran acquisition has been not only a good strategy, but it seems to be the best one that Southwest has put into place. After the acquisition, the company had 685 aircrafts available to operate and serve more than 100 locations; it now has more than 100 million users and 43,000 employees. The reasons why I believe that the acquisition was beneficial and a good strategic move for Southwest are: they were able to acquire a competitor and therefore grow their business by acquiring new resources, procedures, capabilities and knowledge from AirTran.
The acquisition will also allow Southwest to expand their route networks and to serve major airports such Hartsfield-Jackson in Atlanta as well as Mexico and the Caribbean. Also, this strategic move will allow Southwest to be even more profitable they estimated that the acquisition would generate over $400 million after the complete integration of both companies. Lastly, another benefit of this acquisition is that they will be able to continue the expansion of their “Southwest Effect” which involves bringing in more competition, providing lower fares and stimulating passenger traffic.
2. What strategic issues and problems did Gary Kelly and Southwest executives need to address as they proceeded to close the deal with
References: http://www.huffingtonpost.com/2010/09/27/southwest-airlines-airtran_n_739975.html http://www.airtranairways.com/about-us/corporate_info.aspx http://southwest.investorroom.com/?int=GFOOTER-ABOUT-INVESTOR