Southwest airlines company financial analysis

Company Overview

During peak travel seasons, Southwest operates more than 4, weekday departures among a network of 99 destinations in the United States and 10 additional countries.

These strategies will help Southwest maintain their position in the airline industry, but also maintain its profitability. Customers earn mileage credits for flying on the airline or using their car rental services when they pay in advance for the right to obtain the services or a discount on the services.

Company Reports

Firstly, high initial capital investment is required because airplanes and professional aircraft pilots are essential for airline industry. And while there are a few ways in which they can distinguish themselves via frequent flyer reward programs, amenities and Southwest airlines company financial analysis offerings such as food, Wi-Fi plans, staff, etc.

This innovation allows customers to completely bypass the computer reservation systems of major airlines by obtaining a confirmation number and showing up for the flight Freiberg and Freiberg, As launch customer of the Boeing MAX 8 in North America, the Company operates the largest fleet in the world of Boeing aircraft, all of which are equipped with satellite-based WiFi.

According to their notes, the fair value of financial instruments are estimated by Southwest itself rather than based on the price on market exchange, leaving management with substantial control over the valuation.

Furthermore, they reduce their costs by using aircraft with more seats while not providing larger seats for first class. Obviously, shuttle buses, cars and trains have the competitive advantages of low cost but sacrifice the benefits of customer services and time, while taking flights as transportation saves passengers more time and offers more friendly service, such as waiting room, snacks and beverage on board, especially for long distance or severe road condition.

The revenue recognition of Southwest follows the standard that tickets sold for passenger air travel are initially deferred as Air traffic liability. Southwest has announced its intention to sell tickets in for service to Hawaii, subject to requisite governmental approvals.

EADSYcreating a duopoly. Long-term Forecast of CSFs Southwest is firmly aware of the purpose and position as the best low-cost airline, and adhering to the mission of prioritizing customers, so its CSFs were implemented and it has been profitable for 44 consecutive years. Southwest is unique in the airline industry in that its entire fleet is made up of Boeing s.

This translates to less boarding time for customers through the use of innovative policies such as: LUV is headquartered in Dallas, Texas.

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Southwest Business, Accounting, Financial And Prospective Analysis

Customers loved the idea and the paperwork was reduced tremendously therefore, saving money. So in other words, the risk of mileage credits valuation model arises if this model cannot be adjusted in time to keep up with the new standard and therefore leads to the understatement of liabilities.

More essays like this: Southwest is committed to returning value to its Shareholders.

One of the product distribution strategies that Southwest Airline uses are different from custom to airlines, Southwest Airlines does not rely on travel agents to distribute their products. However, the new standards require the use of standalone selling price.

The cost of renting an airport gate is very high especially in case of hub airports. Southwest allocates a portion of the transaction price to mileage credits and defers revenue recognition until the future service is provided or the mileage credits expire unused, using incremental cost method.

Customers who connect to the WiFi network may use their personal devices to view on-demand movies and television shows, as well as nearly 20 channels of free, live TV.

The financial covenant requires a minimum coverage ratio of adjusted pre-tax income to fixed obligations. From its first flights on June 18,Southwest Airlines launched an era of unprecedented affordability in air travel described by the U. Travel bookings on Southwest Airlines are done primarily through direct marketing by phone and the Internet Miller,without a middleman.

Get Access Southwest Airlines Company Financial Analysis Essay Sample Over the past five years, Southwest Airlines has showed to be growing at a steady pace, with the exception of the economic crisis in Refer to the corresponding quarterly earnings release for the reconciliation of reported amounts to non-GAAP items.

The cost of change is low because customers who usually plan their trips in advance with more flexibility could choose a different transportation other than flight. Furthermore, it is difficult for airlines to differentiate leading to increased cost competition.

If Southwest violates the covenant, cash available under the facility would be decreased or the costs to keep the facility intact would be increased.

Southwest also changes and innovates to keep up with the competition. For example, Southwest adjusted useful life for Classic fleets timely because of their low efficiency. Southwest consistently applies its accounting method to estimate the amount of tickets that will expire. Southwest also, optimizes its aircraft usage by performing quick turnaround times.

Additionally, switching costs are low despite airlines promoting frequent flyer programs, or prompting bundling services such as a rental car and hotel.Key Financial Ratios for Southwest Airlines Company (LUV) - view income statements, balance sheet, cash flow, and key financial ratios for Southwest Airlines Company and all the companies you.

Southwest Airlines does not review past postings to determine whether they remain accurate, and information contained in such postings may have been superseded.

This website contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act ofSection 27A of the Securities Act ofas amended. A Financial Ratio AnalysisOf Southwest Airlines Corporation The most widely used Iinancial ratios Ior establishing the short-term liquidity oI a company are highlighted in the below chart.

Documents Similar To Financial Analysis-southwest Airlines. Southwest Airlines Case. Uploaded by. Sheila Marie Gil-Versoza.5/5(6). Sep 08,  · Southwest Airlines Co. engages in the management of a passenger airline.

Southwest Airlines Company Financial Analysis Essay Sample

It operates in U.S. states, District of Columbia, the Commonwealth of Puerto Rico, Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.

Southwest Airlines Financial Analysis Words | 18 Pages. Executive Summary The strategy of Southwest Airlines (SWA) has remained the same, which is to give customers low-cost, point-to-point airfare, with excellent customer service.

Ratio Analysis: Profitability Conclusions The airline was established inheadquartered in Dallas, Texas. Southwest Airlines is the largest low-cost, no-frills airline Southwest offers valuable service at an affordable price.

Southwest’s e-booking system was the first of its kind.

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Southwest airlines company financial analysis
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