Happy Flier Essay

1882 Words Jan 25th, 2016 8 Pages
Happy Flier:
A Financial Analysis on Southwest Airlines

Thomas J. Baucus

FIN 200


Executive Summary

The purpose of this report is an in-depth analysis on the financial position of Southwest Airlines Co. (LUV). As it stands, Southwest Airlines is a big player in the Regional Airline Industry due to the company’s focus on efficiency and consumer support. The company is prepared to handle the conditions cause by the decline in the economic cycle due to a conservative approach. Southwest Airline’s financial statements and ratios indicate a large increase in operations and profitability in the last three years. However, recent financing activities indicate an increase in current liabilities, PPE and a decrease in
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proved profitable time and time again. The industry itself concerns itself with the delivering of mail, supplies and the carrying of customers to their desired destination. Southwest Airlines sets itself apart from its competition by its direct consumer flights and frequent other entity acquisitions. (Points Guy) Southwest Airlines provides its customer with low fares and conveniently timed flights throughout the United States and other Caribbean destinations. “In recent years, Southwest has complemented this service with more medium to long-haul routes, including transcontinental service.” Southwest is simply “a cut above the rest” says Reeves. Southwest Airlines focuses on a low price and efficient cost structure which allows it to remain profitable. (Reeves)
Southwest Airlines has a number of direct competitors in the regional and international airline industry. Fortunately, the company’s largest direct competitors: Delta Airlines and American Air Lines do not receive the same financing opportunities. This is most likely due to the industry’s historical thin net income margins. (Reeves)
Current Financial Environment
The current financial environment of the airline industry is struck with a number of unfortunate circumstances. Regrettably fuel prices, material and infrastructure are still taking a massive toll on the industry. The federal government is enforcing a powerful set of regulations; which at least, created a wide variety

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