Southwest's Record-Breaking Financial Performance

Record-breaking financial results have been Southwest signature since the founding of the airline with only few exceptions. For this assignment, I will only be reporting on the 2014 and 2015 financial performance. 2015 was the 42nd consecutive year of profitability for Southwest out of its 45th year of service, and 49 years of existence. Southwest is the only airline that did not lay off employees due to the September 11, 2001 airlines debacle. This shows the prudence and smartness of the people of Southwest. During the 2015 shareholders meeting, the Chief Executive Officer, Gary Kelly said, “the 2015 year was a gratifying, successful, and record-setting year” (Southwest, 2015). In fact, key financial metrics such as total revenue, gross profit, …show more content…
(Nasdaq, 2016). The 2014 results were driven by a 2.0 percent increase in passenger revenue yield and a 2.4 points increased in load factor (Southwest, 2015). 2014 was also the year that Southwest integrated AirTran acquisition, lunched their rapid rewards program, and embarked on a fleet modernization away from the classic B737s to new thirty-three 737-800s, and twenty-five 737-700s were converted to 737-800s. They were ahead of their schedule of retiring those classic aircraft in 2021 (Business Travel News, 2016). These and more have contributed to the record results. Additionally, 2014 saw the beginning of a 50% expansion at Dallas Love field airport in Texas. During the same period, more gates and slots were acquired at LaGuardia in New York and Regan National Airport in Washington …show more content…
For the financial itself, net income rose to a record $2.2 billion, total operating revenues were up 6.5 percent to $19.8 billion, accompanied by a healthy capacity increase of 7.2 percent compared to 2014. The 50% expansion at Dallas Love Field in 2014 contributed immensely. This expansion added a 50 % capacity growth year over year and 150 % increase in traffic measured by Revenue Passenger Mile (RPM). Data from the bureau of transportation statistics shows that RPM and Available Seat Mile (ASM), areas where they have been the number one among 85 U.S passenger carriers for 2016 increased by 13.46% and 11.48% respectively compared to the previous 12 Months period. (Bureau of Transportation Statistics, 2016). Load Factor (LF), where they ranked number 12th, also increased by 1.50 points in January 2016 compared to the last 12 Months period. (Bureau of Transportation Statistics, 2016). Furthermore, additional slots and gates at Washington Reagan National and New York LaGuardia Airports, added 28 and 6 flights respectively. Four (4) new international destinations were started in 2015, San Jose, Costa Rica; Puerto Vallarta, Mexico; Belize City, Belize; and Liberia Costa,