How did Southwest Airlines remained Profitable?

By: Aakash Bhagat

Objective

To observe and understand the different tactics which were used by Southwest Airlines that helped them to achieve the success which other airlines hope to.

About Southwest Airlines Co.

Major U.S. airlines.

World’s largest low-cost carrier company.

Founded in 1967 and adopted its current name in 1971.

IPO was offered in 1971.

Fight Planning

Point-to-Point Flying

High frequency

Short Haul

Single Plane Tactics

Southwest is the world’s largest operator of Boeing 737.

In 2014, the airlines recorded 680 Boeing 737 in his fleet.

Low maintenance cost.

Fuel Hedging

1. Use of fuel derivative instruments.

2. Hedges based on real commodities1. WTI c rude, Brent crude, Gulf Coast jet fuel

2. Refined products : Heating Oils and Gasoline

3. Profit of 28 million in 2014, compared to 118 million loss in 2013.

Southwest Common-size Income Statement

Conclusion

Southwest is a company with the potential to reach the heights that no company had ever attained.

Many companies around the world are now trying to follow the path that Southwest had walked in it’s past, for instance Indigo and Spice-jet.

Q.E.D.

Thank you