1. 1. Southwest airlines 2011
Leadership philosophy.
We manage in good times: company and people can be secure and
prosper through bad times.
Southwest: cost –advantage and low-fare focus.
Acquisition of Air Tran: workforce: 8000: 25% of size of
Southwest. Fleet aircraft # Boeing 737 and new market Non U.S.
destination.
The U.S. AIRLINE Industry
Deregulation
Fuel crisis 1979
Air traffic controllers strike 1981
Recessions 1980s.
Fierce competition and low fares increase of demand for airline
travel.
Industry Economics
80% of airline operating cost were fixed or semi variable.
Only variable cost:
Travel agency commissions
Food costs
Ticketing fees.
High fixed-cost structure.
Southwest.
Fuel cost 17% of TOC 2004
30% TOC 2009
1.SAW
SWA strategy is based mainly on controlling operating costs.
SWA Targets routes with high consumers demand and flies from point to point
instead of flying to hub-spoke.
Company culture: personnel commitment:
Having a turnaround of 15 min whereas, competitors have an average of
45 min. This allows to SAW to keep their planes in the air more hours per day
compared to its rivals.

2. SAW has a low price strategy; indeed, SAW is price leader since the customers
are price sensitive. To implement its strategy Saw has a fleet composed only of
one type of plane Boeing 737 which gives to SAW a plenty of advantages:
Standardization of pilots and mechanics training, and as a result this lowers the
maintenance cost. What is more, by doing so, SAW has strengthened its
bargaining power toward Boeing. As a matter of fact, SAW is by far Boeing’s
biggest client for Boeing 737.This allows SAW to newer its fleet since it has a
low debt levels. By doing so SAW is going to increase the fuel efficiency and
reduce significantly maintenance cost as well.
Having said that, SAW is capable of working on no fuel-cost, indeed, thanks to
its positive management employee relationship SAW has a competitive labour
cost and a highly labour efficiency compared to its rivals.
All those competitive advantages make SAW ‘penetration easy to new market
such as northeast, Canada and Mexico; since with its low price strategy and high
load factors SAW is capable of taking a rapidly a high market share of this new
market and as a result ensure a steady growth.
Short –haul
High- frequency
People are the most important element of SWA no downsizing.
Young fleet
SWA provides a service with well-recruited employees: high commitment, very
responsible and positive attitude which makes flying with SAW an enjoyable
flight.

3. 1. SOUTHWEST AIRLINES: SWA
Question 4:
SWA is among the rare airlines company that has succeeded in running
an outstanding performances for years in very difficult business where
a plenty of companies have faced bankruptcy. Nevertheless, SAW is
facing key challenges since to keep its steady growth it has to do
expansion in other areas such as the northeast region of the USA where
airports are congested and there is a heavy traffic-control. Thus, those
factors could hamper SAW operation efficiency in terms of
lengthening planes turnaround and causing delays which could lead to
customers’ dissatisfaction and ultimately undermine SAW reputation.
What is more, in my point of view, the second challenge is regarding
the Air Tran acquisition; indeed, the question is to what extent this
acquisition could interfere with SAW culture. As a matter of fact, Air
Trans fleets is different from SAW one; not to mention that the Air
Trans flies in international routes and offers first- class seats.
Having said that, I am totally optimistic about SWA future; actually, I
truly believe that SAW has a strong competitive advantages.
Firstly, SAW has a low price strategy; indeed, SAW is price leader
since the customers are price sensitive. To implement its strategy Saw
has a fleet composed only of one type of plane Boeing 737 which gives
to SAW a plenty of advantages: standardization of pilots and
mechanics training, and as a result this lowers the maintenance cost.
What is more, by doing so, SAW has strengthened its bargaining
power toward Boeing. As a matter of fact, SAW is by far Boeing’s
biggest client for Boeing 737.This allows SAW to newer its fleet since
it has a low debt levels, and as a result, increase the fuel efficiency and
reduce significantly maintenance cost as well.

4. Secondly, SAW is capable of managing well no fuel-cost, indeed, thanks
to its positive management employee relationship SAW has a competitive
labour cost and a highly labour efficiency compared to its rivals. Since,
people are the most important element of SWA.
Ultimately, taking into-consideration all the facts mentioned above, I
truly believe that SWA future performances and hence, I would definitely
invest in buying SWA’stock.