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Southwest Airlines Co, -2004

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Southwest Airlines Co, -2004 Presented by: Megan Dow, Kristin Belanger, and Ang le Bourgoin Overview Stocks Stock Information Industry vs. LUV Goals and Strategies ... – PowerPoint PPT presentation

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Title: Southwest Airlines Co, -2004


1
Southwest Airlines Co, -2004
Presented by Megan Dow, Kristin Belanger, and
Angèle Bourgoin
2
Overview
  • Stocks
  • Stock Information
  • Industry vs. LUV
  • Goals and Strategies
  • History Existing Condition
  • Their Mission and Vision Statement
  • New Mission and Vision Statement
  • External Opportunities and Threats
  • CPM
  • EFE
  • Internal Strengths and Weaknesses
  • IFE
  • Analysis
  • SWOT Matrix
  • SPACE
  • IE Matrix
  • Grand Strategy Matrix
  • QSPM
  • Different Strategies
  • Decisions
  • Implementation
  • Evaluation
  • Update!
  • References

3
Stocks
4
More Stock Information
  • Traded on the NYSE under LUV
  • Last traded at 17.97
  • Current volume is 4,585,000
  • EPS .67
  • Dividend yield 10

5
Industry Vs. LUV
LUV represents home at Dallas Love field, and
theme for Employee and Customer Relations
6
Goals and Objectives
  • Ensure highest quality Customer Service in the
    air or on the ground.
  • Ready to help customers under any circumstances.
  • Are there to ensure you make it from point A to
    point B safely
  • To stay the most successful with low-fare, high
    frequency point-to-point carrier.

7
History of Southwest Airlines
  • On February 20, 1968 the Texan Aeronautical
    Commissions approved plans to fly in 3 states,
    the c5eators are Rollin King and Herb Kelleher
  • Expanded through 1980s to 1990s by 1993
    Southwest Airlines could fly in 34 states in 15
    states
  • They also expanded into new destinations
    California, Northwest, Florida, East Coast
  • The competitors could not keep up, 500 pound
    cockroach that was too big to stamp out
  • While the airfare was dropping the traffic went
    up tremendously, in 1994 United started a shuttle
    service, the large air carriers were feeding
    traffic into transpacific and transcontinental
    routes, they could not keep up
  • In 2004 Southwest Airlines is fourth largest
    domestic carrier, customer boarded
  • In 2002 they traveled in 58 cities and 30 states,
    it has been 13 years in a row that they are
    profitable, even after September 11, 2001, net
    income fell 52.9 percent, Southwest was the only
    airline company that had a profit all the other
    companies were in the red
  • Was the first airline to achieve the Triple
    Crown, they had five difference Triple Crown
    dedicated to the Employees of Southwest Airlines
    for their excellent achievements.

8
Their Mission and Vision
Statement
  • Mission
  • The mission of Southwest Airlines is dedication
    to the highest quality of Customer Service
    delivered with a sense of warmth, friendliness,
    individual pride, and Company Spirit. To give
    ordinary people the opportunity to fly.
  • To the employees
  • We are committed to provide our Employees a
    stable work environment with equal opportunity
    for learning and personal growth. Creativity and
    innovation are encouraged for improving the
    effectiveness of Southwest Airlines. 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.
  • Vision
  • To have a conservative increase growth,
    capitalize and cutback schedules of other
    airlines. To continue expanding conservatively in
    long-haul success.

9
New Mission Statement
  • Southwest Airlines is a company that is for
    anyone and every that wants to get from point A
    to point B by flying. Our service and philosophy
    is to fly safe, with high frequency, low-cost
    flights that can get passengers to their
    destinations on time and often closer to their
    destination. We fly in 58 cities and 30 states
    and are the worlds largest short-haul carrier
    and we make sure that it is run efficiently and
    in a economical way. Our technology is current
    such as our check-ins process is faster.
    Striving to expand and grow in a conservative
    manner is key, and being financially stable by
    keeping quality high and cost low. Our
    excellence is managing cost by our rapid
    twenty-minute gate turnaround, a non-stop flight
    with our airplanes, and a more productive
    workforce which keeps above our competitors. We
    treat our employees like customers, family and
    motivate and compensate them for doing a job well
    done. We continue to be in the Fortune Magazines
    most admired companies (2nd in 2002) 100 best
    companies to work for. Since 1972 we have ranked
    first in Money Magazines featured in The 30 Best
    Stocks. In our communities we make donations to
    charities to organizations and people in time of
    need.

10
New Vision Statement
  • Our vision is to expand our locations both
    domestic and overseas by being the largest and
    most profitable airline company to achieve both
    short and long-haul carriers efficiently and with
    low cost. Also to be an airline carrier that has
    the most productive workforce to guarantee the
    best flight possible for each and every passenger.

11
External Opportunities and Threats
  • Opportunities
  • First airline on the web
  • Only in 58 cities expansion to other cities
  • Lowest cost-preavailable-seat out of all airlines
  • Booked online 13.6 more than American Airlines
  • Top-ranked website in customer satisfaction among
    travel sites
  • Threats
  • JetBlue
  • Global tensions post 9/11
  • Competitors caught SW strategy
  • New Tax System
  • New Security measures
  • Aviation insurance costs
  • Terrorists Attacks
  • Severe decrease in customer air travel

12
EFE
13
CPM
14
Internal Strengths and Weaknesses
  • Strengths
  • Best low-fare carrier
  • Triple Crown for annual performance
  • Quickly seize a strategic opportunity when arises
  • Team Spirit Employees come 1st not customers
  • Made 20 of flights to one stop
  • Even though Unionized still negotiate flexible
    work hours
  • Marketing on the web, 50 revenue from online
    booking
  • Weaknesses
  • Conservative Growth Tactics
  • Cuts cost in customer service areas
  • Not subscribed to centralized reservation service
  • Other Co.s now using same management strategies
    since found out about SW Airlines
  • Provides service in only 58 cities

15
IFE
16
Key Ratios
  • Profit Margin 7.23
  • Return on Assets 4.01
  • Return on Equity 8.98
  • Revenue 7.58B
  • Gross Profit 2.49B
  • Operating Cash Flow 2.23B
  • Market Capital 14.41B
  • Current .941
  • Debt to Equity .299
  • Total Debt 2.00B

17
SWOT Matrix
18
SPACE Matrix
19
IE Matrix
20
GSM
21
Possible Strategies
  • Expand into more cities
  • Increase amount of shorter destination flights
    into the larger airports
  • Increase direct flights
  • Purchase bigger planes
  • Get agreements with Airports for flights
  • Eventually look to acquire American Airlines

22
QSPM
23
Decisions
  • Based on QSPM, the best looking strategy would be
    to expand into more cities
  • The longer non-stop flights have more of a
    competitive market and would be hard to keep low
    cost flights

24
Implementation
  • Increase
  • The number of flights per day by 5
  • Increase revenue by 15
  • Helps to cover new increasing cost
  • Flights into larger airports
  • Decrease
  • Operating costs by 10
  • Flights to cities with more than 4 flights a day

25
Evaluations
  • Quarterly reports
  • Average daily flights
  • Average passenger per flight
  • Quarterly meetings to evaluate current plan and
    make necessary changes as needed

26
UPDATE!!
  • Expanded into 63 cities as of 2006
  • Operates over 2,800 flights per day

27
References
  • www.southwest.com
  • www.finance.yahoo.com
  • Strategic Management Concepts and Cases 10th
    Edition
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