As a mutual fund manager, I have decided to conduct some research on Southwest Airlines. I will provide an overview of the company’s history, and an analysis of their strengths, weaknesses, opportunities, and threats (SWOT). While there wasn’t any rhyme or reasoning behind my selection, I do feel that Southwest Airlines is one of the leading airlines in the United States. Conducting a SWOT analysis will help me understand what the company’s strengths and weaknesses, identify their opportunities and become aware of their threats. I will also determine the company’s internal and external stakeholders, and their needs. From my research I will decide whether I should invest in this company.
History of Southwest Airlines
Southwest Airlines was established in 1967 as Air Southwest Company. The founders were Rollin King and Herb Kelleher. Southwest started airline service with three Boeing 737 planes. Flights were to three cities in Houston, Dallas, and San Antonio, Texas; the service began in 1971. This was also the year the company changed their name to Southwest Airlines Company. In 1977 Southwest Airlines began traded on the New York Stock Exchange under the symbol “LUV”. Southwest began offering a frequent flyer program in the 1980’s. This program allowed passengers to collect miles for flights taken and after accumulating so many, the passenger was allowed to redeem for credit on a free flight or a reduced flight. Southwest legal fight began in the 1980s when other airlines took legal action to keep Southwest on the ground. Shortly after, Southwest began offering senior citizens 65 years and older flights at twenty-five dollars each way Monday thru Friday between 9:00 a.m. and 3:00 p.m. As the years passed the company offered flights to more and more cities. Their top priority was getting customers to their destination timely and at the lowest fares. By the early 1990s, Southwest Airlines had grown to be the nation’s seventh-largest airline, with over 35 million customers a year, servicing forty-one cities in nineteen states. (Keli Flynn, 2012) Southwest Airlines acquires AirTran Holdings, Inc. the former parent company for AirTran Airways, Inc. in 2011. (AirTran n.d.) “Today, Southwest is the nation's largest carrier in terms of originating domestic passengers boarded serving 77 destinations in 39 states and the District of Columbia.” (Southwest n.d.) Strengths of Southwest Airlines
Strengths are beneficial factors of the organization, which allow a company to have an advantage over competitors. Gary Kelly, CEO Southwest Airlines has been quoted saying "Our people are our single greatest strength and most enduring longterm competitive advantage." (About
Southwest n.d.) The key strengths that have resulted in success for Southwest are the company has the best low-fare carrier by standard of fleet. Southwest has flexible work hours even though employees belong to a union. Southwest is well known for their great staff relationships; they look after their staff. They are also dedicated to providing quality customer service. Customers can use the internet for booking, and checking in for their flights. Southwest also sells frequent flyer points and/or credits and related services to business partners participating in the Rapid Rewards frequent flyer program, including car rental agencies, hotels, restaurants, and retail locations Fortune magazine list Southwest as the 10th out of 50 most admired companies. (Money-CNN 2012) Weakness of Southwest Airlines
Weaknesses are a lack of beneficial factors to achieving successful outcomes. Southwest does not offer frills such as airport lounges, videos on their planes, or telephone service. Southwest only offers one class of seating; they do not have business, first class, or seat assignments. Southwest does not offer flights to any international locations. Most employees belong to a union. Opportunities for Southwest Airlines...