Environmental Analysis: Southwest Airlines

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Southwest Airlines Southwest Airlines is one of the most successful airlines in the United States. There has never been layoffs or strikes in the history of the company, although there were several times when layoffs could have been justified, including the months following the September 11, 2001 terrorist attacks. However, Southwest's Mission statement says “Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” (Southwest, 1988). The Airline has always believed that their corporate culture is one of the keys to their success. The culture recognizes that employees have emotional intelligence and that their attitudes and morale are key to the teamwork and creative environment. Southwest Airlines is operating in an industry that is struggling to make profits. The slowing economic growth and raising fuel costs are lowering earnings while revenues remain the same. The macroeconomic factors affecting the airline industry include unemployment, the economic growth in the United States, and inflation. With low economic growth, consumers are finding luxury items more difficult to purchase and airline tickets for vacations fall into that category. Unemployment contributes to a lack of vacation travelers since individuals who are not employed do not have extra money for vacation or airline tickets. Inflation also causes operating costs of the airlines to be higher cutting into profits. Unemployment is affecting the airline industry. Although unemployment in the United States is relatively low, the airline industries unemployment has been more volatile. As unemployment has risen, the airlines have laid off a much higher percentage of their people. As unemployment has fallen, they have hired back a large number. Layoffs among major airlines are not uncommon. Southwest is unique in its history of refusing to layoff any employees.


References: Air Transportation Association. (2008). Energy/Fuel. Retrieved July 4th, 2008 from http://www.airlines.org/economics/energy/. Bureau of Labor Statistics. (2008). Air Transportation Industry. Retrieved July 6h, 2008 from http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=CES4348100001&data_tool=XGtable. CNN Money. (2008, June 28). Southwest Cuts 31 Flights, but Adds 40 More. Retrieved July 7th, 2008 from http://money.cnn.com/2008/06/26/news/companies/southwest_airlines.ap/index.htm. Crawford, Malik. (2008). CPI Detailed Report. Data from May 2008. US Department of Labor: Bureau of Labor Statistics. Retrieved July 5th, 2008 from http://stats.bls.gov/cpi/cpid0805.pdf. Felsenthal, Mark. (2008, June 13). Inflation Up Sharply on Gasoline. Reuters. Retrieved July 4, 2008 from http://www.reuters.com/article/newsOne/idUSN1233421520080613?pageNumber=1&virtualBrandChannel=0. Plunkett Research, Ltd Reuters. (2008, June 13). Consumers ' Mood Sinks In June: Survey. Retrieved July 6th, 2008 from http://www.reuters.com/article/newsOne/idUSN1339735620080613?pageNumber=2&virtualBrandChannel=0. Smith, Gene. (2004). An Evaluation of the Corporate Culture of Southwest Airlines. Measuing Business Excellence, 8 (4), 26 .Retrieved May 20, 2008, from Emerald database. Southwest Airlines USA Today. (2008, April 19). Southwest Airlines Fuel Hedging Pushes Profits. Retrieved July 6th, 2008 from http://www.usatoday.com/travel/flights/2007-04-19-southwest-posts-first-quarter-profit_N.htm.

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