South-West Airline
uth-West AirlineA07-05-0006
Southwest Airlines 2005
You are now free to move about the country.™
In 2005, Southwest Airlines (Southwest), the once-scrappy underdog in the U.S. airline industry, carried more domestic passengers than any other U.S. airline. The company, unlike all of its major competitors, had been consistently profitable for decades and had weathered recessions, energy crises, and the September 11 terrorist attacks. In recent years, Southwest had become more aggressive with its growth. The company entered the Philadelphia market in 2004 and planned to enter Pittsburgh in 2005, two markets that had long been dominated by the financially strapped US Airways. Southwest planned to increase its capacity about 10% in 2005, adding 29 planes to its fleet of 417. In December 2004, Southwest announced a code-sharing arrangement with ATA Airlines, a tactic Southwest had avoided in the past. Along with the expansion plans, Southwest was making internal moves to strengthen accountability and communication between departments and pushing its employees to become even more productive. In the fourth quarter 2004, excluding fuel costs, Southwest’s operating costs declined 4.5% on a per-unit basis. An insight into Southwest’s management philosophy can be found in the company’s 2001 annual report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of September 11. Why? Because for several decades our leadership philosophy has been: we manage in good times so that our Company and our People can be job secure and prosper through bad times.…Once again, after September 11, our philosophy of managing in good times so as to do well in bad times proved a marvelous prophylactic for our Employees and our Shareholders.
The U.S. Airline Industry
The U.S. commercial airline industry was permanently altered in October 1978 when President Carter signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board
Southwest Airlines 2005
You are now free to move about the country.™
In 2005, Southwest Airlines (Southwest), the once-scrappy underdog in the U.S. airline industry, carried more domestic passengers than any other U.S. airline. The company, unlike all of its major competitors, had been consistently profitable for decades and had weathered recessions, energy crises, and the September 11 terrorist attacks. In recent years, Southwest had become more aggressive with its growth. The company entered the Philadelphia market in 2004 and planned to enter Pittsburgh in 2005, two markets that had long been dominated by the financially strapped US Airways. Southwest planned to increase its capacity about 10% in 2005, adding 29 planes to its fleet of 417. In December 2004, Southwest announced a code-sharing arrangement with ATA Airlines, a tactic Southwest had avoided in the past. Along with the expansion plans, Southwest was making internal moves to strengthen accountability and communication between departments and pushing its employees to become even more productive. In the fourth quarter 2004, excluding fuel costs, Southwest’s operating costs declined 4.5% on a per-unit basis. An insight into Southwest’s management philosophy can be found in the company’s 2001 annual report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of September 11. Why? Because for several decades our leadership philosophy has been: we manage in good times so that our Company and our People can be job secure and prosper through bad times.…Once again, after September 11, our philosophy of managing in good times so as to do well in bad times proved a marvelous prophylactic for our Employees and our Shareholders.
The U.S. Airline Industry
The U.S. commercial airline industry was permanently altered in October 1978 when President Carter signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board