How does one grow a major airline whose revenues exceed $12.1 billion in 2010, and whose year-end results marked its 38th consecutive year of profitability? The answer: merge with another low-cost rival to become a top contender in the domestic travel market. The merging of two companies, however, doesn’t come without a price. This memo analyzes how the existing and proposed systems will need to be utilized to ensure a successful merger of Southwest Airlines (SWA) and AirTran. Based on this study, the following conclusions have been reached: 1.
SWA needs to ensure proper training to support and maintain AirTran airplanes. 2.
The conversion of AirTran employees to the SWA culture will be challenging but necessary. 3.
SWA must remain true to their culture of “Keep It Simple” to ease the assimilation of other companies. 4.
It is recommended that Southwest Airlines merge with AirTran given the above four topics are implemented. Additional Aircraft
The Boeing 737 has been the only type of aircraft in the Southwest Airline fleet since its origins in 1971. The use of one aircraft has contributed significantly to lowering the bargaining power of suppliers by: •
Reducing Operating Cost
Minimizing spare parts inventory •
Simplifying training for maintenance & repair
Simplifying scheduling •
Increasing efficiency and speed of maintenance
Although SWA has dealt with differences between the 737 classes, the addition of AirTran brings yet another fleet of aircraft, the Boeing 717. This aircraft is drastically different than the 737 in all aspects. SWA will have to ensure through Boeing that the dated 717s will be able to be supported in the fleet for repairs and maintenance when needed. It would be advantageous of SWA to partner with Boeing so that they can incorporate additional training programs for employees to ensure a seamless addition of aircraft. The training must be done if they want to maintain their pursuit of lowest operating costs. Addition...
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