Cost Management Case Study: Southwest Airlines

Over the past few years, Southwest Airlines has been tailoring more toward the corporate customer. For example, Southwest now has business select and early bird check in. Both of these two perks have produced direct revenue for the company of about $295 million in 2013. (Bhaskar, 2014). The strategy for the company has helped make Southwest one of the biggest airlines. Southwest Airlines had a net income in 2013 of $754 million and total operating revenue were a record in 2013 of $17.7 billion. (Southwest Airlines Co., 2013). The company has worked on cost control and the stable fuel prices to achieve their annual goal for cost performance.
Southwest Airlines had a total asset of $19,345 million in 2013 and Delta had $52,252 million. Southwest had $5,676 million in current liabilities and Delta had $14,152 million. Total stockholders’ equity equaled to $7,336 million for Southwest in 2013 and $11,643 million for Delta. Overall, Southwest had a total of $754 million in net income and Delta had $10,540 million in net income for 2013.
The stable fuel prices for 2013 helped Southwest and Delta keep cost down. In 2013, Delta spent 11,464 million in fuel and Southwest spent 5,763 million (Delta Airlines Co. , 2013). Below are additional years showing the cost spent by both companies. Both airline companies in 2012 observed the …show more content…
The founders Rolling King and Herb Kelleher started the incorporation with $500,000 with the intent of providing passenger services within the State of Texas. June 1971, the Airline was renamed to Southwest Airlines and began services of flights between Dallas, Houston and San Antonio, Texas as one-way flights only. The airline did not see its first profit until 1973 because they only had limited aircraft and Boeing the manufacturing company providing 90 percent of its financing. Approximately, five years later Southwest Airlines increased its net income to over $17