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Southwest Airlines Accounting Analysis
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Southwest Airlines Accounting Analysis

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Final group presentation for managerial accounting

Final group presentation for managerial accounting


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  • dear author, I have seen the ppt of southwest airline accounting analysis. I am a master student now and we have a group work on analyzing southwest's performance. Your excellently made ppt would guide us a lot in financial analysis. Thus, would you please a copy to my email box to zhouy2u@gmail.com? Thank you ever so much!
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  • How has market value changed, and why?
  • Transcript

    • 1. Financial Analysis Trent Davis | Tad Kilburn | Greg Williams
    • 2.  
    • 3.  
    • 4. Analyzing Airlines
    • 5. LUV Company Overview
      • Founded in 1971
      • 550 aircraft, 72 airports serviced
      • Emphasis on customer service, company spirit, individual pride, and friendliness
      • Discount airline
      • Focus on one model of aircraft
      • Limited frills (open seating, no meals, no first class)
      • Profitable for 37 consecutive years
    • 6. LUV Service Map
    • 7. JBLU Company Overview
      • Founded in 1998
      • 160 aircraft, 62 airports served
      • Many executives are former Southwest Airlines employees
      • Focus on providing low fares
      • Despite low fare focus, provide some amenities (full meal service, satellite radio, and TVs at each person’s seat)
    • 8. JBLU Service Map
    • 9. DAL Company Overview
      • Founded in 1924 as a crop dusting company
      • Largest airline in the world in terms of passengers, fleet size, and destinations
      • 733 aircraft, 247 airports served
      • Filed bankruptcy in 2004, emerged in 2007
      • Traditional airline that focuses on business travelers
    • 10. DAL Service Map
    • 11. Sizing Up the Airlines
      • Delta leads in Revenue
      • All three companies have grown since 2005
      • JetBlue has the highest percentage growth
    • 12.  
    • 13. Operating Revenues
    • 14. Expenses: Fuel and Oil Fuel and Oil   2009 % of Rev. 2008 % of Rev. 2007 % of Rev. 2006 % of Rev. 2005 % of Rev. Southwest 3044 29.41% 3713 33.68% 2690 27.28% 2138 23.53% 1341 17.68% JetBlue 945 28.76% 1397 41.23% 968 34.06% 786 33.26% 514 30.22%
    • 15. Expenses: Salaries, Wages, and Benefits Salaries, Wages, and Benefits   2009 % of Rev. 2008 % of Rev. 2007 % of Rev. 2006 % of Rev. 2005 % of Rev. Southwest 3468 33.51% 3340 30.30% 3213 32.58% 3052 33.59% 2782 36.68% JetBlue 776 23.62% 694 20.48% 648 22.80% 553 23.40% 428 25.16%
    • 16. Expenses: Landing Fees and Other Rents Landing Fees and Other Rents   2009 % of Rev. 2008 % of Rev. 2007 % of Rev. 2006 % of Rev. 2005 % of Rev. Southwest 718 6.94% 662 6.01% 560 5.68% 495 5.45% 454 5.99% JetBlue 213 6.47% 199 5.87% 180 6.33% 158 6.69% 112 6.58%
    • 17. Net Income/Loss – Common Size Net Income (loss)   2009 % of Rev. 2008 % of Rev. 2007 % of Rev. 2006 % of Rev. 2005 % of Rev. Southwest 99 0.96% 178 1.61% 645 6.54% 499 5.49% 484 6.38% JetBlue 58 1.77% -85 -2.51% 12 0.42% -7 -0.30% -25 -1.47%
    • 18.  
    • 19. Cash and Cash Equivalents
    • 20. Receivables, Less Allowances
    • 21. Total Current Assets
    • 22. Total Current Liabilities
    • 23. Property and Equipment
    • 24. Accounts Payable
    • 25. Air Traffic Liability
    • 26. Current Maturities of Long Term Debt/Leases
    • 27. Long Term Debt and Lease Obligations
    • 28. Treasury Stock
    • 29.  
    • 30.  
    • 31. Elements of Market Value
      • Southwest’s decline in market value is due to stock price drops
      • JetBlue’s market value has remained relatively stable because it issued more stock
      • Delta exited from bankruptcy then issued more stock, buoying its Market Value
    • 32.  
    • 33. Market Value and Book Value Comparison
    • 34.  
    • 35.  
    • 36.  
    • 37. Net Profit Margins
      • Southwest is the only company to post a profit each year
      • JetBlue has lost money in three of five years
      • Delta has taken heavy losses in the observed period
    • 38. Accounts Receivable Turnover
      • Southwest has the leading Accounts Receivable Turnover rate
      • JetBlue is steadily improving their AR Turnover
      • Delta has the lowest AR Turnover rate, and it’s remaining steady
    • 39. Days in Accounts Receivable
      • Delta has the poorest Days in Accounts Receivable figures
      • Southwest and JetBlue are improving their Days in Accounts Receivable
      • Southwest leads these three companies
    • 40. Current Ratio
      • Southwest’s Average Current Ratio over this period is 0.99
      • JetBlue’s ACR over this period is 1.02
      • Delta’s ACR over this period is 0.83
    • 41. Assets and Liabilities
    • 42. Quick Ratio
    • 43.  
    • 44. Return on Assets and Equity
    • 45. Return on Assets and Equity
    • 46. Return on Assets and Equity
    • 47. Long Term Debt
      • Delta’s debt has risen throughout the observed period
      • JetBlue has the worst ratio, but theirs has fallen steadily
      • Southwest has the lowest LTDR, but it’s increasing
    • 48. Interest Coverage
      • Southwest’s excellent Interest Coverage has fallen
      • JetBlue’s Interest Coverage has remained below zero throughout the five year period
      • Delta’s has fluctuated quite a bit, returning to near zero
    • 49. Conclusions and Questions
      • Southwest delivers on its strategic goals by minimizing costs, enabling consistent profitability by minimizing costs
      • By combining a high level of customer service with disciplined financial management, Southwest succeeds
      • Investors committed to investing in an airline would be wise to consider Southwest