Running Head: GROUP 4 CASE STUDY 2 1 GROUP 4 CASE STUDY 2 2 Chamisi Pastor Liberty University BUSI690 Case Study 2: Southwest Airlines Southwest Airlines Case Study Questions11 and 12 completed on Excel sheet Question 13 Specific recommended strategy and long-term objectives. Explain why you chose the strategy and discuss how much the strategy will cost to implement and how much new revenue your strategy will create. Include your action timetable agenda for accomplishing your strategy. The strategy used in this paper was to increase revenues through boosting sales. While this appeared to be a good outcome, the general outlook was that there were increased overhead expenses, which resulted in poor NPV for the projected years. For example, the model in the cash flow statement shows that the projected NPV value stands at $4,723.94 whereas the NPV from the previous year showed that the NPV stood at $8,268.44. In other words, this says that the projected year, although bearing profits, will see a larger number of incurred costs. The result will be reduced profits for the airline despite higher sales. Due to the nature of this enterprise, it is therefore not possible to implement this strategy. Increasing sales for the airline embodies unique circumstances, which do not improve the outcomes of the company. Balance SheetSOUTHWEST AIRLINES CO (LUV) CashFlowFlag BALANCE SHEETDELTA AIR LINES INC (DAL) CashFlowFlag BALANCE SHEETUNITED CONTINENTAL HOLDINGS INC (UAL) CashFlowFlag BALANCE SHEETAMERICAN AIRLINES GROUP INC (AAL) BALANCE SHEETFiscal year ends in December. USD in millions except per share data.201420152016Delta 2014-2015Delta 2015-2016Fiscal year ends in December. USD in millions except per share data.201420152016Delta 2014-2015Delta 2015-2016Fiscal year ends in December. USD in millions except per share data.201420152016Delta 2014-2015Delta 2015-2016Fiscal year ends in December. USD in millions except per share data.201420152016Delta 2014-2015Delta 2015-2016AssetsAssetsAssetsAssetsCurrent assetsCurrent assetsCurrent assetsCurrent assetsCashCashCashCashCash and cash equivalents1282158316800.23478939160.0612760581Cash and cash equivalents208819722762-0.05555555560.4006085193Cash and cash equivalents2002300621790.5014985015-0.2751164338Cash and cash equivalents994390322-0.6076458753-0.1743589744Short-term investments170614681625-0.13950762020.1069482289Short-term investments121714654870.2037797864-0.6675767918Short-term investments238221902249-0.0806045340.0269406393Short-term investments630958646037-0.07053415760.0295020464Total cash2988305133050.02108433730.083251393Total cash3305343732490.0399394856-0.0546988653Total cash4384519644280.1852189781-0.1478060046Total cash730362546359-0.14363960020.0167892549Receivables3654745460.2986301370.1518987342Restricted cashERROR:#DIV/0!ERROR:#DIV/0!Restricted cash62126-0.9581320451-1Restricted cash774695638-0.1020671835-0.0820143885Inventories342311337-0.09064327490.0836012862Recei ...

1. Running Head: GROUP 4 CASE STUDY 2 1
GROUP 4 CASE STUDY 2 2
Chamisi Pastor
Liberty University
BUSI690
Case Study 2: Southwest Airlines
Southwest Airlines Case Study
Questions11 and 12 completed on Excel sheet
Question 13
Specific recommended strategy and long-term objectives.
Explain why you chose the strategy and discuss how much the
strategy will cost to implement and how much new revenue your
strategy will create. Include your action timetable agenda for
accomplishing your strategy.
The strategy used in this paper was to increase revenues through
boosting sales. While this appeared to be a good outcome, the
general outlook was that there were increased overhead
expenses, which resulted in poor NPV for the projected years.
For example, the model in the cash flow statement shows that
the projected NPV value stands at $4,723.94 whereas the NPV
from the previous year showed that the NPV stood at $8,268.44.
In other words, this says that the projected year, although
bearing profits, will see a larger number of incurred costs. The
result will be reduced profits for the airline despite higher sales.
Due to the nature of this enterprise, it is therefore not possible
to implement this strategy. Increasing sales for the airline
embodies unique circumstances, which do not improve the

2. outcomes of the company.
Balance SheetSOUTHWEST AIRLINES CO (LUV)
CashFlowFlag BALANCE SHEETDELTA AIR LINES INC
(DAL) CashFlowFlag BALANCE SHEETUNITED
CONTINENTAL HOLDINGS INC (UAL) CashFlowFlag
BALANCE SHEETAMERICAN AIRLINES GROUP INC
(AAL) BALANCE SHEETFiscal year ends in December. USD in
millions except per share data.201420152016Delta 2014-
2015Delta 2015-2016Fiscal year ends in December. USD in
millions except per share data.201420152016Delta 2014-
2015Delta 2015-2016Fiscal year ends in December. USD in
millions except per share data.201420152016Delta 2014-
2015Delta 2015-2016Fiscal year ends in December. USD in
millions except per share data.201420152016Delta 2014-
2015Delta 2015-2016AssetsAssetsAssetsAssetsCurrent
assetsCurrent assetsCurrent assetsCurrent
assetsCashCashCashCashCash and cash
equivalents1282158316800.23478939160.0612760581Cash and
cash equivalents208819722762-
0.05555555560.4006085193Cash and cash
equivalents2002300621790.5014985015-0.2751164338Cash and
cash equivalents994390322-0.6076458753-0.1743589744Short-
term investments170614681625-
0.13950762020.1069482289Short-term
investments121714654870.2037797864-0.6675767918Short-
term investments238221902249-
0.0806045340.0269406393Short-term
investments630958646037-0.07053415760.0295020464Total
cash2988305133050.02108433730.083251393Total
cash3305343732490.0399394856-0.0546988653Total
cash4384519644280.1852189781-0.1478060046Total
cash730362546359-
0.14363960020.0167892549Receivables3654745460.298630137
0.1518987342Restricted
cashERROR:#DIV/0!ERROR:#DIV/0!Restricted cash62126-

3. 0.9581320451-1Restricted cash774695638-0.1020671835-
0.0820143885Inventories342311337-
0.09064327490.0836012862Receivables322221392064-
0.3361266294-0.0350631136Receivables114611281176-
0.01570680630.0425531915Receivables177114251594-
0.19536984750.1185964912Deferred income taxes477-
1ERROR:#DIV/0!Inventories852697891-
0.18192488260.2783357245Inventories6667388730.1081081081
0.1829268293Inventories10048631094-
0.1404382470.2676709154Prepaid expenses232188310-
0.18965517240.6489361702Deferred income taxes3275-
1ERROR:#DIV/0!Deferred income taxes591-
1ERROR:#DIV/0!Prepaid expenses1260748639-0.4063492063-
0.1457219251Total current assets440440244498-
0.08628519530.1177932406Prepaid
expenses7337968540.08594815830.0728643216Prepaid
expenses7307408320.01369863010.1243243243Other current
assetsERROR:#DIV/0!ERROR:#DIV/0!Non-current
assetsERROR:#DIV/0!ERROR:#DIV/0!Other current
assets107819873930.8432282004-0.8022143936Total current
assets813878287309-0.0380928975-0.0663004599Total current
assets12112998510324-0.17561096430.0339509264Property,
plant and equipmentERROR:#DIV/0!ERROR:#DIV/0!Total
current assets1246590567451-0.2734857601-0.1772305654Non-
current assetsERROR:#DIV/0!ERROR:#DIV/0!Non-current
assetsERROR:#DIV/0!ERROR:#DIV/0!Gross property, plant
and
equipment2251324685264640.09647759070.0720680575Non-
current assetsERROR:#DIV/0!ERROR:#DIV/0!Property, plant
and equipmentERROR:#DIV/0!ERROR:#DIV/0!Property, plant
and equipmentERROR:#DIV/0!ERROR:#DIV/0!Accumulated
Depreciation-8221-9084-
94200.10497506390.036988111Property, plant and
equipmentERROR:#DIV/0!ERROR:#DIV/0!Gross property,
plant and
equipment2672630917342340.15681358980.107287253Gross

4. property, plant and
equipment3534340654453530.15027020910.1155851823Net
property, plant and
equipment1429215601170440.09158970050.0924940709Gross
property, plant and
equipment3126933910368310.08446064790.0861397818Accum
ulated Depreciation-7965-9337-
109160.17225360950.1691121345Accumulated Depreciation-
12259-13144-141940.0721918590.0798843579Equity and other
investments35400.1428571429-1Accumulated Depreciation-
9340-10871-124560.16391862960.1458007543Net property,
plant and
equipment1876121580233180.1502585150.0805375348Net
property, plant and
equipment2308427510311590.19173453470.1326426754Goodwi
ll97097097000Net property, plant and
equipment2192923039243750.05061790320.057988628Goodwil
l45234523452300Goodwill40914091409100Intangible
assets3634644260.2782369146-
0.0818965517Goodwill97949794979400Intangible
assets428441363632-0.0345471522-0.1218568665Intangible
assets2240224921730.0040178571-0.0337927968Other long-
term assets1362133480.56617647060.6338028169Intangible
assets4603486148440.0560504019-0.0034972228Deferred
income taxes2037655ERROR:#DIV/0!-0.6784486991Deferred
income taxes24771498ERROR:#DIV/0!-0.3952361728Total
non-current
assets1579617288187880.09445429220.0867653864Deferred
income taxes4320495630640.1472222222-0.3817594835Other
long-term assets1647757703-0.540376442-0.071334214Other
long-term assets224421032029-0.0628342246-
0.0351878269Total
assets2020021312232860.0550495050.0926238739Other long-
term assets1010142817330.41386138610.2135854342Total non-
current assets2921533033328310.1306862913-
0.006115097Total non-current

5. assets3165938430409500.21387283240.0655737705Liabilities
and stockholders' equityERROR:#DIV/0!ERROR:#DIV/0!Total
non-current assets4165644078438100.0581428846-
0.0060801307Total assets3735340861401400.0939148127-
0.0176451873Total
assets4377148415512740.10609764460.0590519467LiabilitiesE
RROR:#DIV/0!ERROR:#DIV/0!Total assets541215313451261-
0.0182369136-0.0352504987Liabilities and stockholders'
equityERROR:#DIV/0!ERROR:#DIV/0!Liabilities and
stockholders' equityERROR:#DIV/0!ERROR:#DIV/0!Current
liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Liabilities and
stockholders'
equityERROR:#DIV/0!ERROR:#DIV/0!LiabilitiesERROR:#DIV
/0!ERROR:#DIV/0!LiabilitiesERROR:#DIV/0!ERROR:#DIV/0!
Short-term debt2586375661.4689922481-
0.1114599686LiabilitiesERROR:#DIV/0!ERROR:#DIV/0!Curre
nt liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Current
liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Accounts
payable1203178138-0.8520365752-0.2247191011Current
liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Short-term
debt13131224849-0.0677837014-0.306372549Short-term
debtERROR:#DIV/0!ERROR:#DIV/0!Taxes
payable241252ERROR:#DIV/0!0.0456431535Capital
leases1216156311310.2853618421-0.2763915547Capital
leases1101351160.2272727273-0.1407407407Capital
leases1708223118550.306206089-0.1685342896Accrued
liabilities1565252919170.6159744409-0.2419928826Accounts
payable2622274325720.0461479786-0.0623405031Accounts
payable188218692139-0.00690754520.1444622793Accounts
payable1377156315920.13507625270.0185540627Other current
liabilities2897382139710.31895063860.0392567391Taxes
payableERROR:#DIV/0!ERROR:#DIV/0!Accrued
liabilities1818235023070.2926292629-0.0182978723Accrued
liabilities3291353937240.07535703430.0522746539Total
current liabilities5923740668440.2503798751-
0.075884418Accrued

6. liabilities4393450145740.02458456640.0162186181Deferred
revenues5759587058650.0192741795-0.0008517888Other
current liabilities705962726701-
0.11148887940.0683992347Non-current
liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Deferred
revenues1580163516480.03481012660.0079510703Other
current liabilities16269661010-0.4059040590.0455486542Total
current
liabilities1343513605138720.01265351690.0196251378Long-
term debt2434254128210.04396055880.1101928375Other
current liabilities7068708453140.0022637238-
0.2498588368Total current liabilities125081241412286-
0.0075151903-0.0103109393Non-current
liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Capital
leases165ERROR:#DIV/0!-1Total current
liabilities1687917526152390.0383316547-0.1304918407Non-
current liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Long-term
debtERROR:#DIV/0!ERROR:#DIV/0!Deferred taxes
liabilities325924903374-0.23596195150.3550200803Non-
current liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Long-term
debt1012196739918-0.04426440080.0253282332Capital
leasesERROR:#DIV/0!ERROR:#DIV/0!Deferred
revenues43ERROR:#DIV/0!-1Deferred taxes
liabilitiesERROR:#DIV/0!ERROR:#DIV/0!Capital
leases5717278220.27320490370.1306740028Deferred
revenuesERROR:#DIV/0!ERROR:#DIV/0!Pensions and other
benefits201ERROR:#DIV/0!-1Deferred revenues260222462278-
0.13681783240.0142475512Deferred taxes liabilities1591-
1ERROR:#DIV/0!Pensions and other benefits756274507842-
0.01481089660.0526174497Other long-term
liabilities180911081806-0.38750690990.6299638989Pensions
and other benefits151381385513378-0.0847536002-
0.0344280043Deferred revenues287928263178-
0.01840916990.1245576787Other long-term
liabilities2075321725257750.04683660190.1864211738Total
non-current liabilities750265488001-

7. 0.1271660890.2218998167Other long-term
liabilities1068986578079-0.190101974-0.0667667783Pensions
and other benefits415933703473-
0.18970906470.0305637982Total non-current
liabilities2831529175336170.0303725940.1522536418Total
liabilities1342513954148450.03940409680.0638526587Total
non-current liabilities284292475823735-0.1291287066-
0.0413199774Other long-term liabilities312828851804-
0.077685422-0.3746967071Total
liabilities4175042780474890.02467065870.1100748013Stockho
lders' equityERROR:#DIV/0!ERROR:#DIV/0!Total
liabilities453084228438974-0.06674318-0.0782802005Total
non-current liabilities224491948119195-0.1322107889-
0.0146809712Stockholders'
equityERROR:#DIV/0!ERROR:#DIV/0!Common
stock80880880800Stockholders'
equityERROR:#DIV/0!ERROR:#DIV/0!Total
liabilities349573189531481-0.0875933289-
0.0129800909Common stock765-0.1428571429-
0.1666666667Additional paid-in
capital1315137414100.04486692020.0262008734Additional
paid-in capital129811087512294-
0.16223711580.1304827586Stockholders'
equityERROR:#DIV/0!ERROR:#DIV/0!Additional paid-in
capital15135115917223-0.2341592336-0.3768441032Retained
earnings74169409114180.26874325780.2135189712Retained
earnings3456762379031.20572916670.0367309458Common
stock4430-0.25Retained earnings-8562-12301640-
0.8563419762-2.3333333333Treasury stock-2026-3182-
48720.57058242840.5311125079Treasury stock-313-373-
2740.1916932907-0.2654155496Additional paid-in
capital7721794665690.0291413029-0.1732947395Treasury
stockERROR:#DIV/0!ERROR:#DIV/0!Accumulated other
comprehensive income-738-1051-3230.4241192412-
0.6926736441Accumulated other comprehensive income-7311-
7275-7636-0.0049240870.0496219931Retained earnings-

8. 388334573427-1.8902910121-0.0086780445Accumulated other
comprehensive income-4559-4732-
50830.03794691820.0741758242Total stockholders'
equity6775735884410.08605166050.1471867355Total
stockholders'
equity881310850122870.23113582210.1324423963Treasury
stock-367-1610-5113.3869209809-0.6826086957Total
stockholders' equity2021563537851.7882236517-
0.3283052351Total liabilities and stockholders'
equity2020021312232860.0550495050.0926238739Total
liabilities and stockholders' equity541215313451261-
0.0182369136-0.0352504987Accumulated other comprehensive
income-1079-831-829-0.2298424467-0.0024067389Total
liabilities and stockholders'
equity4377148415512740.10609764460.0590519467Total
stockholders' equity2396896686592.7420701169-
0.034240464Total liabilities and stockholders'
equity3735340861401400.0939148127-
0.0176451873http://financials.morningstar.com/balance-
sheet/bs.html?t=LUV&region=usa&culture=en-US
http://financials.morningstar.com/balance-sheet/bs.html?t=DLA
http://financials.morningstar.com/balance-sheet/bs.html?t=UAL
http://financials.morningstar.com/balance-
sheet/bs.html?t=AAL&region=usa&culture=en-
UShttp://financials.morningstar.com/balance-
sheet/bs.html?t=LUV&region=usa&culture=en-
UShttp://financials.morningstar.com/balance-
sheet/bs.html?t=DLAhttp://financials.morningstar.com/balance-
sheet/bs.html?t=UAL
Cash FlowsSOUTHWEST AIRLINES CO (LUV) Statement of
CASH FLOWDELTA AIR LINES INC (DAL) Statement of
CASH FLOWUNITED CONTINENTAL HOLDINGS INC
(UAL) Statement of CASH FLOWAMERICAN AIRLINES
GROUP INC (AAL) Statement of CASH FLOWFiscal year
ends in December. USD in millions except per share
data.201420152016Delta 2014-2015Delta 2015-2016Fiscal year

9. ends in December. USD in millions except per share
data.201420152016Delta 2014-2015Delta 2015-2016Fiscal year
ends in December. USD in millions except per share
data.201420152016Delta 2014-2015Delta 2015-2016Fiscal year
ends in December. USD in millions except per share
data.201420152016Delta 2014-2015Delta 2015-2016Cash Flows
From Operating
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Cash Flows From
Operating ActivitiesCash Flows From Operating ActivitiesCash
Flows From Operating ActivitiesNet
income1136218122440.91989436620.0288858322Net
income659452643735.8679817906-0.033804684Net
income1132734022635.4840989399-0.6916893733Net
income2882761026761.6405274115-0.6483574244Depreciation
&
amortization938101512210.08208955220.202955665Depreciatio
n &
amortization1771183519020.03613777530.0365122616Deprecia
tion &
amortization1679181919770.08338296610.0868609126Deprecia
tion &
amortization1513160918180.06345009910.1298943443Amortiza
tion of debt discount/premium and issuance
costsERROR:#DIV/0!ERROR:#DIV/0!Amortization of debt
discount/premium and issuance costs59-
1ERROR:#DIV/0!Amortization of debt discount/premium and
issuance costsERROR:#DIV/0!ERROR:#DIV/0!Amortization of
debt discount/premium and issuance costs-171-122-119-
0.2865497076-0.0245901639Investment/asset impairment
charges21ERROR:#DIV/0!ERROR:#DIV/0!Deferred income
taxes414258122235.2342995169-0.1387059279Deferred income
taxes13-31771648-245.3846153846-1.5187283601Deferred
income taxes346-30141611-9.710982659-
1.5345056403Deferred income taxes501-109455-1.2175648703-
5.1743119266Stock based
compensationERROR:#DIV/0!ERROR:#DIV/0!Stock based

10. compensationERROR:#DIV/0!ERROR:#DIV/0!Stock based
compensation304284100-0.0657894737-0.6478873239Accounts
receivableERROR:#DIV/0!ERROR:#DIV/0!Inventory172155-
140-0.0988372093-1.9032258065Accounts payable-251-77239-
0.6932270916-4.1038961039Accounts receivable-160352-160-
3.2-1.4545454545Other working
capital48107018221.2916666667-0.8299065421Prepaid
expenses58-102-26-2.7586206897-0.7450980392Other working
capital4-275-1085-
69.752.9454545455InventoryERROR:#DIV/0!ERROR:#DIV/0!
Other non-cash items279-919170-4.29390681-
1.1849836779Other working capital-9981196-7-2.1983967936-
1.0058528428Other non-cash
items573625005.3508771930.3812154696Other working
capital-1526-538414-0.6474442988-1.7695167286Net cash
provided by operating
activities2902323842930.11578221920.3258184064Other non-
cash items2812-2264-1120-1.8051209104-0.5053003534Net
cash provided by operating
activities2634599255421.2748671222-0.0751001335Other non-
cash items-10868184-1.62962962961.7058823529Cash Flows
From Investing ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Net
cash provided by operating
activities4947792772050.602385284-0.0910811152Cash Flows
From Investing ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Net
cash provided by operating
activities3080624965241.02889610390.0440070411Investments
in property, plant, and equipment-80-102-
1090.2750.068627451Cash Flows From Investing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Investments in
property, plant, and equipment-2005-2747-
32230.3700748130.1732799418Cash Flows From Investing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Purchases of
investments-3080-1986-2388-
0.35519480520.2024169184Investments in property, plant, and
equipment-2249-2945-

11. 33910.30947087590.1514431239Property, plant, and equipment
reductions948628-0.085106383-0.6744186047Investments in
property, plant, and equipment-5311-6151-57310.1581623047-
0.0682815802Sales/Maturities of investments318522232263-
0.30204081630.0179937022Property, plant, and equipment
reductions226ERROR:#DIV/0!ERROR:#DIV/0!Purchases of
investments-1041-2517-
27681.41786743520.0997218911Property, plant, and equipment
reductions33351230.06060606062.5142857143Other investing
activities-1752-2048-20380.1689497717-
0.0048828125Acquisitions, net-276ERROR:#DIV/0!-
1Sales/Maturities of
investments584270727123.63527397260.0018470632Acquisitio
ns, netERROR:#DIV/0!ERROR:#DIV/0!Net cash used for
investing activities-1727-1913-
22720.1077012160.187663356Purchases of investments-1795-
1498-1707-0.165459610.1395193591Other investing
activities112-2213-1.1964285714-1.5909090909Purchases of
investments-5380-8126-62410.5104089219-0.2319714497Cash
Flows From Financing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Sales/Maturities of
investments15337392686-0.51793868232.6346414073Net cash
used for investing activities-2256-2493-
32380.10505319150.2988367429Sales/Maturities of
investments7179856960920.1936202814-0.2890652351Debt
issued3005005150.66666666670.03Other investing
activities482531-0.47916666670.24Cash Flows From Financing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Other investing
activities5687959-0.860915493-0.253164557Debt repayment-
561-213-600-0.62032085561.8169014085Net cash used for
investing activities-2463-3955-21550.6057653268-
0.4551201011Debt issued14321073808-0.250698324-
0.246971109Net cash used for investing activities-2911-5594-
56980.92167639990.0185913479Common stock
issued46ERROR:#DIV/0!-1Cash Flows From Financing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Debt repayment-

12. 2630-2301-1351-0.125095057-0.4128639722Cash Flows From
Financing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Repurchases of
treasury stock-955-1180-17500.23560209420.4830508475Debt
issued1038450ERROR:#DIV/0!-0.5664739884Repurchases of
treasury stock-312-1233-26142.95192307691.1200324412Debt
issued3302500977010.51695941850.5374326213Cash dividends
paid-139-180-2220.29496402880.2333333333Debt repayment-
2928-2558-1709-0.1263661202-0.3318999218Other financing
activities-86-34-56-0.60465116280.6470588235Debt
repayment-3132-2153-3827-0.31257982120.7775197399Other
financing activities1073133-
0.971962616843.3333333333Repurchases of treasury stock-
1100-2200-260110.1822727273Net cash provided by (used for)
financing activities-1596-2495-
32130.5632832080.2877755511Repurchases of treasury stock-
1062-3846-45002.62146892660.1700468019Net cash provided
by (used for) financing activities-1248-1024-1924-
0.17948717950.87890625Cash dividends paid-251-359-
5090.43027888450.4178272981Net change in cash-12181004-
909-1.8243021346-1.9053784861Cash dividends paid-144-278-
2240.9305555556-0.1942446043Net change in cash-7330197-
5.1232876712-0.6777408638Other financing activities1039-
9109-1.0086621752-13.1111111111Cash at beginning of
period322020023212-0.37826086960.6043956044Other
financing activities7219-44-0.987517337-5.8888888889Cash at
beginning of period135512821583-
0.05387453870.2347893916Net cash provided by (used for)
financing activities-3240-4088-
42600.26172839510.042074364Cash at end of
period2002300623030.5014985015-0.2338656021Net cash
provided by (used for) financing activities-315-1259-
8942.9968253968-0.2899126291Cash at end of
period1282158316800.23478939160.0612760581Net change in
cash-756-116790-0.8465608466-7.8103448276Free Cash
FlowERROR:#DIV/0!ERROR:#DIV/0!Net change in cash-146-

13. 604-683.1369863014-0.8874172185Free Cash
FlowERROR:#DIV/0!ERROR:#DIV/0!Cash at beginning of
period284420881972-0.2658227848-0.0555555556Operating
cash flow2634599255421.2748671222-0.0751001335Cash at
beginning of period1140994390-0.1280701754-
0.6076458753Operating cash
flow2902323842930.11578221920.3258184064Cash at end of
period208819722762-0.05555555560.4006085193Capital
expenditure-2005-2747-32230.3700748130.1732799418Cash at
end of period994390322-0.6076458753-0.1743589744Capital
expenditure-1828-2143-21470.17231947480.0018665422Free
Cash FlowERROR:#DIV/0!ERROR:#DIV/0!Free cash
flow629324523194.1589825119-0.2853620955Free Cash
FlowERROR:#DIV/0!ERROR:#DIV/0!Free cash
flow1074109521460.01955307260.9598173516Operating cash
flow4947792772050.602385284-0.0910811152Supplemental
schedule of cash flow
dataERROR:#DIV/0!ERROR:#DIV/0!Operating cash
flow3080624965241.02889610390.0440070411Supplemental
schedule of cash flow
dataERROR:#DIV/0!ERROR:#DIV/0!Capital expenditure-2249-
2945-33910.30947087590.1514431239Cash paid for income
taxes1514ERROR:#DIV/0!-0.0666666667Capital expenditure-
5311-6151-57310.1581623047-0.0682815802Cash paid for
income taxes15514409028.2903225806-0.3736111111Free cash
flow2698498238140.8465530022-0.2344439984Cash paid for
interest660584ERROR:#DIV/0!-0.1151515152Free cash flow-
223198793-1.04392649047.0918367347Cash paid for
interest128105100-0.1796875-0.0476190476Supplemental
schedule of cash flow
dataERROR:#DIV/0!ERROR:#DIV/0!Supplemental schedule of
cash flow dataCash paid for interest452385ERROR:#DIV/0!-
0.1482300885http://financials.morningstar.com/cash-
flow/cf.html?t=LUV http://financials.morningstar.com/cash-
flow/cf.html?t=DAL http://financials.morningstar.com/cash-
flow/cf.html?t=UAL&region=usa&culture=en-

14. UShttp://financials.morningstar.com/cash-
flow/cf.html?t=AAL&region=usa&culture=en-US
http://financials.morningstar.com/cash-
flow/cf.html?t=UAL&region=usa&culture=en-
UShttp://financials.morningstar.com/cash-
flow/cf.html?t=DALhttp://financials.morningstar.com/cash-
flow/cf.html?t=LUV
Income StatementsSOUTHWEST AIRLINES CO (LUV)
CashFlowFlag INCOME STATEMENTDELTA AIR LINES INC
(DAL) CashFlowFlag INCOME STATEMENTUNITED
CONTINENTAL HOLDINGS INC (UAL) CashFlowFlag
INCOME STATEMENTAMERICAN AIRLINES GROUP INC
(AAL) INCOME STATEMENTFiscal year ends in December.
USD in millions except per share data.201420152016Delta
2014-2015Delta 2015-2016Fiscal year ends in December. USD
in millions except per share data.201420152016Delta 2014-
2015Delta 2015-2016Fiscal year ends in December. USD in
millions except per share data.201420152016Delta 2014-
2015Delta 2015-2016Fiscal year ends in December. USD in
millions except per share data.201420152016Delta 2014-
2015Delta 2015-
2016Revenue1860519820204250.06530502550.0305247225Rev
enue4036240704396390.0084733165-
0.0261645047Revenue389013786436556-0.0266574124-
0.0345446862Revenue426504099040180-0.0389214537-
0.0197609173Cost of revenue767760256132-
0.21518822460.0177593361Cost of revenue229671709615940-
0.2556276397-0.0676181563Cost of revenue180721366612604-
0.2438025675-0.0777111079Cost of revenue221361707915924-
0.2284513914-0.0676269102Gross
profit1092813795142930.26235358710.0361000362Gross
profit1739523608236990.3571716010.0038546256Gross
profit2082924198239520.1617456431-0.0101661294Gross
profit2051423911242560.16559422830.0144285057Operating
expensesERROR:#DIV/0!ERROR:#DIV/0!Operating
expensesERROR:#DIV/0!ERROR:#DIV/0!Operating

15. expensesERROR:#DIV/0!ERROR:#DIV/0!Operating
expensesERROR:#DIV/0!ERROR:#DIV/0!Sales, General and
administrative5434638367980.17464114830.0650164499Sales,
General and administrative1090511938117440.0947271894-
0.0162506282Sales, General and
administrative1119111809115780.055222947-
0.0195613515Sales, General and
administrative1005210918122130.08615200960.1186114673De
preciation and
amortization938101512210.08208955220.202955665Depreciatio
n and
amortization1771183519020.03613777530.0365122616Deprecia
tion and
amortization1679181919770.08338296610.0868609126Deprecia
tion and
amortization1295136415250.05328185330.1180351906Other
operating expenses233122812514-
0.02145002150.1021481806Restructuring, merger and
acquisition71635-0.9511173184-1Other operating
expenses558654046059-0.03258145360.1212065137Other
operating expenses4918542552340.1030906873-
0.0352073733Total operating
expenses87039679105330.11214523730.0882322554Other
operating
expenses1797199831010.11185308850.5520520521Total
operating
expenses1845619032196140.03120936280.0305800757Total
operating
expenses1626517707189720.08865662470.0714406732Operatin
g income2225411637600.8498876404-0.0864917396Total
operating
expenses1518915806167470.04062150240.059534354Operating
income2373516643381.1769911504-0.1602787456Operating
income4249620452840.4601082608-0.1482914249Interest
Expense1079075-0.1588785047-0.1666666667Operating
income2206780269522.5367180417-0.108946424Interest

16. Expense683620542-0.0922401171-0.1258064516Interest
Expense887880991-0.007891770.1261363636Other income
(expense)-302-547-1380.8112582781-0.747714808Interest
ExpenseERROR:#DIV/0!ERROR:#DIV/0!Other income
(expense)-562-32723-0.4181494662-1.0703363914Other income
(expense)-150-70863.72-1.0084745763Income before income
taxes1816347935470.91574889870.0195458465Other income
(expense)-1134-645-316-0.4312169312-0.5100775194Income
before income taxes1128421938192.740248227-
0.0948091965Income before income
taxes3212461642990.4371108344-0.0686741768Provision for
income taxes680129813030.90882352940.0038520801Income
before income taxes1072715766365.6763059701-
0.0727958642Provision for income taxes-4-31211556779.25-
1.4985581544Provision for income taxes330-29941623-
10.0727272727-1.5420841683Net income from continuing
ops1136218122440.91989436620.0288858322Provision for
income taxes413263122635.3704600484-0.1398707716Net
income from continuing ops1132734022635.4840989399-
0.6916893733Net income from continuing
ops2882761026761.6405274115-0.6483574244Net
income1136218122440.91989436620.0288858322Net income
from continuing ops659452643735.8679817906-
0.033804684Net income1132734022635.4840989399-
0.6916893733Net income2882761026761.6405274115-
0.6483574244Net income available to common
shareholders1136218122440.91989436620.0288858322Net
income659452643735.8679817906-0.033804684Net income
available to common shareholders1132734022635.4840989399-
0.6916893733Net income available to common
shareholders2882761026761.6405274115-
0.6483574244Earnings per
shareERROR:#DIV/0!ERROR:#DIV/0!Net income available to
common shareholders659452643735.8679817906-
0.033804684Earnings per
shareERROR:#DIV/0!ERROR:#DIV/0!Earnings per

17. shareERROR:#DIV/0!ERROR:#DIV/0!Basic1.653.33.5810.0848
484848Earnings per
shareERROR:#DIV/0!ERROR:#DIV/0!Basic3.0519.526.865.4-
0.6485655738Basic4.0211.394.851.8333333333-
0.5741878841Diluted1.643.273.550.9939024390.0856269113Ba
sic0.795.685.826.18987341770.0246478873Diluted2.9319.476.8
55.6450511945-
0.6481766821Diluted3.9311.074.811.8167938931-
0.5654923216Weighted average shares
outstandingERROR:#DIV/0!ERROR:#DIV/0!Diluted0.785.635.7
96.21794871790.0284191829Weighted average shares
outstandingERROR:#DIV/0!ERROR:#DIV/0!Weighted average
shares
outstandingERROR:#DIV/0!ERROR:#DIV/0!Basic687661627-
0.037845706-0.0514372163Weighted average shares
outstandingERROR:#DIV/0!ERROR:#DIV/0!Basic3713763300.
0134770889-0.1223404255Basic717668552-0.0683403068-
0.1736526946Diluted696669633-0.0387931034-
0.0538116592Basic836797751-0.0466507177-
0.0577164366Diluted390377330-0.0333333333-
0.124668435Diluted734687556-0.0640326975-
0.1906841339EBITDA2861458448430.60223698010.056500872
6Diluted845804755-0.0485207101-
0.0609452736EBITDA3490665863380.9077363897-
0.0480624812EBITDA5612710571080.26603706340.000422237
9EBITDA3977963788541.423183304-
0.0812493515http://financials.morningstar.com/income-
statement/is.html?t=LUV
http://financials.morningstar.com/income-
statement/is.html?t=DAL
http://financials.morningstar.com/income-
statement/is.html?t=UAL&region=usa&culture=en-US
http://financials.morningstar.com/income-
statement/is.html?t=AAL&region=usa&culture=en-US
http://financials.morningstar.com/income-
statement/is.html?t=LUVhttp://financials.morningstar.com/inco

18. me-
statement/is.html?t=DALhttp://financials.morningstar.com/inco
me-statement/is.html?t=UAL&region=usa&culture=en-US
Sheet3
Proforma BSSOUTHWEST AIRLINES CO (LUV)
CashFlowFlag BALANCE SHEETFiscal year ends in December.
USD in millions except per share data.2017 Proforma
201420152016Delta 2014-2015Delta 2015-2016AssetsCurrent
assetsCashCash and cash equivalents$
1,626.431282158316800.23478939160.0612760581Short-term
investments$ 1,727.07170614681625-
0.13950762020.1069482289Total cash$
3,353.502988305133050.02108433730.083251393Receivables$
494.673654745460.2986301370.1518987342Inventories$
356.03342311337-0.09064327490.0836012862Deferred income
taxes$ 180.49477-1ERROR:#DIV/0!Prepaid expenses$
261.41232188310-0.18965517240.6489361702Total current
assets$ 4,646.11440440244498-
0.08628519530.1177932406Non-current assets$ -
0ERROR:#DIV/0!ERROR:#DIV/0!Property, plant and
equipment$ - 0ERROR:#DIV/0!ERROR:#DIV/0!Gross
property, plant and equipment$
26,408.292251324685264640.09647759070.0720680575Accumu
lated Depreciation$ (9,584.22)-8221-9084-
94200.10497506390.036988111Net property, plant and
equipment$
16,824.071429215601170440.09158970050.0924940709Equity
and other investments$ 27.4535400.1428571429-1Goodwill$
1,045.9297097097000Intangible assets$
449.003634644260.2782369146-0.0818965517Other long-term
assets$ 247.071362133480.56617647060.6338028169Total
non-current assets$
18,593.501579617288187880.09445429220.0867653864Total
assets$
23,239.612020021312232860.0550495050.0926238739Liabilitie

19. s and stockholders' equity$ -
0ERROR:#DIV/0!ERROR:#DIV/0!Liabilities$ -
0ERROR:#DIV/0!ERROR:#DIV/0!Current liabilities$ -
0ERROR:#DIV/0!ERROR:#DIV/0!Short-term debt$
518.972586375661.4689922481-0.1114599686Accounts
payable$ 566.001203178138-0.8520365752-
0.2247191011Taxes payable$
172.46241252ERROR:#DIV/0!0.0456431535Accrued
liabilities$ 2,151.221565252919170.6159744409-
0.2419928826Other current liabilities$
3,822.122897382139710.31895063860.0392567391Total current
liabilities$ 7,230.775923740668440.2503798751-
0.075884418Non-current liabilities$ -
0ERROR:#DIV/0!ERROR:#DIV/0!Long-term debt$
2,795.892434254128210.04396055880.1101928375Capital
leases$ 58.61165ERROR:#DIV/0!-1Deferred taxes liabilities$
3,280.56325924903374-0.23596195150.3550200803Deferred
revenues$ 15.2743ERROR:#DIV/0!-1Pensions and other
benefits$ 71.39201ERROR:#DIV/0!-1Other long-term
liabilities$ 1,700.55180911081806-
0.38750690990.6299638989Total non-current liabilities$
7,922.28750265488001-0.1271660890.2218998167Total
liabilities$
15,153.051342513954148450.03940409680.0638526587Stockho
lders' equity$ - 0ERROR:#DIV/0!ERROR:#DIV/0!Common
stock$ 871.2480880880800Additional paid-in capital$
1,471.621315137414100.04486692020.0262008734Retained
earnings$
10,083.7174169409114180.26874325780.2135189712Treasury
stock$ (3,576.12)-2026-3182-
48720.57058242840.5311125079Accumulated other
comprehensive income$ (763.90)-738-1051-3230.4241192412-
0.6926736441Total stockholders' equity$
8,086.566775735884410.08605166050.1471867355Total
liabilities and stockholders' equity$
23,239.612020021312232860.0550495050.0926238739

20. Proforma ISSOUTHWEST AIRLINES CO (LUV)
CashFlowFlag INCOME STATEMENTFiscal year ends in
December. USD in millions except per share data.Proforma
2017201420152016Delta 2014-2015Delta 2015-2016Revenue$
21,120.001860519820204250.06530502550.0305247225Cost of
revenue$ 7,158.53767760256132-
0.21518822460.0177593361Gross profit$
13,961.471092813795142930.26235358710.0361000362Operati
ng expensesERROR:#DIV/0!ERROR:#DIV/0!Sales, General and
administrative$
6,666.515434638367980.17464114830.0650164499Depreciation
and amortization$
1,136.31938101512210.08208955220.202955665Other
operating expenses$ 2,558.75233122812514-
0.02145002150.1021481806Total operating expenses$
10,361.5787039679105330.11214523730.0882322554Operating
income$ 3,599.892225411637600.8498876404-
0.0864917396Interest Expense$ 98.311079075-0.1588785047-
0.1666666667Other income (expense)$ (356.13)-302-547-
1380.8112582781-0.747714808Income before income taxes$
3,145.461816347935470.91574889870.0195458465Provision for
income taxes$
1,167.46680129813030.90882352940.0038520801Net income
from continuing ops$
1,977.991136218122440.91989436620.0288858322Net income$
1,977.991136218122440.91989436620.0288858322Net income
available to common shareholders$
1,977.991136218122440.91989436620.0288858322Earnings per
share$ - 0ERROR:#DIV/0!ERROR:#DIV/0!Basic$
3.031.653.33.5810.0848484848Diluted$
3.011.643.273.550.9939024390.0856269113Weighted average
shares outstanding$ -
0ERROR:#DIV/0!ERROR:#DIV/0!Basic$ 710.85687661627-
0.037845706-0.0514372163Diluted$ 719.17696669633-
0.0387931034-0.0538116592EBITDA$
4,380.072861458448430.60223698010.0565008726NPV$

21. 80,125.47$ 83,305.13Discount Rate7.00%The strategy used in
this paper was to increase revenues through boosting sales.
While this appeared to be a good outcome, the general outlook
was that there were increased overhead expenses, which
resulted in poor NPV for the projected years. For example, the
model in the cash flow statement shows that the projected NPV
value stands at $4,723.94 whereas the NPV from the previous
year showed that the NPV stood at $8,268.44. In other words,
this says that the projected year, although bearing profits, will
see a larger number of incurred costs. The result will be reduced
profits for the airline despite higher sales.
Due to the nature of this enterprise, it is therefore not possible
to implement this strategy. Increasing sales for the airline
embodies unique circumstances, which do not improve the
outcomes of the company.
Proforma CFSOUTHWEST AIRLINES CO (LUV) Statement of
CASH FLOWFiscal year ends in December. USD in millions
except per share data.Proforma 2017201420152016Delta 2014-
2015Delta 2015-2016Cash Flows From Operating
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Net income$
1,299.671136218122440.91989436620.0288858322Depreciation
& amortization$
795.05938101512210.08208955220.202955665Amortization of
debt discount/premium and issuance
costsERROR:#DIV/0!ERROR:#DIV/0!Investment/asset
impairment charges21ERROR:#DIV/0!ERROR:#DIV/0!Deferred
income taxes$ 257.25501-109455-1.2175648703-
5.1743119266Accounts
receivableERROR:#DIV/0!ERROR:#DIV/0!Other working
capital$ 265.9848107018221.2916666667-0.8299065421Other
non-cash items$ (43.33)279-919170-4.29390681-
1.1849836779Net cash provided by operating activities$
2,578.682902323842930.11578221920.3258184064Cash Flows
From Investing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Investments in

22. property, plant, and equipment$ (71.81)-80-102-
1090.2750.068627451Purchases of investments$ (2,030.09)-
3080-1986-2388-0.35519480520.2024169184Sales/Maturities of
investments$ 2,093.08318522232263-
0.30204081630.0179937022Other investing activities$
(1,468.39)-1752-2048-20380.1689497717-0.0048828125Net
cash used for investing activities$ (1,477.22)-1727-1913-
22720.1077012160.187663356Cash Flows From Financing
ActivitiesERROR:#DIV/0!ERROR:#DIV/0!Debt issued$
313.153005005150.66666666670.03Debt repayment$ (372.09)-
561-213-600-0.62032085561.8169014085Common stock issued$
9.1446ERROR:#DIV/0!-1Repurchases of treasury stock$
(936.44)-955-1180-17500.23560209420.4830508475Cash
dividends paid$ (131.62)-139-180-
2220.29496402880.2333333333Other financing activities$
67.081073133-0.971962616843.3333333333Net cash provided
by (used for) financing activities$ (1,050.78)-1248-1024-1924-
0.17948717950.87890625Net change in cash$ 50.68-7330197-
5.1232876712-0.6777408638Cash at beginning of period$
1,077.00135512821583-0.05387453870.2347893916Cash at end
of period$
1,127.681282158316800.23478939160.0612760581Free Cash
FlowERROR:#DIV/0!ERROR:#DIV/0!Operating cash flow$
2,578.682902323842930.11578221920.3258184064Capital
expenditure$ (1,537.29)-1828-2143-
21470.17231947480.0018665422Free cash flow$
1,041.391074109521460.01955307260.9598173516Supplementa
l schedule of cash flow
dataERROR:#DIV/0!ERROR:#DIV/0!Cash paid for income
taxes$ 519.2815514409028.2903225806-0.3736111111Cash
paid for interest$ 88.98128105100-0.1796875-
0.0476190476NPV$ 4,723.94$8,268.44Discount
Rate7.00%The strategy used in this paper was to increase
revenues through boosting sales. While this appeared to be a
good outcome, the general outlook was that there were
increased overhead expenses, which resulted in poor NPV for

23. the projected years. For example, the model in the cash flow
statement shows that the projected NPV value stands at
$4,723.94 whereas the NPV from the previous year showed that
the NPV stood at $8,268.44. In other words, this says that the
projected year, although bearing profits, will see a larger
number of incurred costs. The result will be reduced profits for
the airline despite higher sales.
Due to the nature of this enterprise, it is therefore not possible
to implement this strategy. Increasing sales for the airline
embodies unique circumstances, which do not improve the
outcomes of the company.
11. Pro-Forma Financial Statements (I/S, B/S and Statement of
Cash Flows) with deltas out 3 years and analysis
Each year must have 2 columns: 1 with your strategy and 1
without your strategy.
a. Include Pro-Forma ratios for the first year out with deltas
contrasting from the most current year’s ratios.
15
5 - Chamisi
12. Net Present Value analysis of proposed strategy’s new cash
flow and EPS/EBIT analysis
NOTE: To construct the first cash flow (cf1) at the very
minimum, the new revenue from your strategy(s) must be
discounted back to the present value by calculating EBIT and
that figure will be your cfn for each year. cf0 (initial cost of
your strategy), cf1 (discounted cash flow first year), r
(opportunity cost of capital, the rate of the next best alternative
use of cash/debt/equity resources).
a.
10
5 - Chamisi

24. 13. Specific recommended strategy and long-term objectives
Explain why you chose the strategy, and discuss how much the
strategy will cost to implement and how much new revenue your
strategy will create. Include your action timetable agenda for
accomplishing your strategy.
10
5 - Chamisi
Southwest Airlines