Over the past 3 years, Southwest Airlines' financial performances have been relatively
consistent. In 2000, they were generating revenues of $5.6 billion, which was an increase of
almost $2 billion from 1999. In 2001 and 2002, their revenue was around $5.5 billion. Their net
income in 2000 was $625 million and has decreased each year to $511million in 2001 and $241
million in 2002. Their operating expenses have increased over the last three years. In 2000
they spent $4.6 million. In 2001 they spent $4.9 millions and in 2002 they spent roughly $5.1
million. The share price of Southwest has been decreasing over the past couple years.
Currently the stock is trading at $14.70. The highest it was trading at was $22.30 in December
of 2000.
Problems and Opportunities
Some of the problems that Southwest faces are that they will receive increased pressure from
new-entry competitors like JetBlue and AirTran Holdings. JetBlue may be on to something big to
gain competitive advantage as they are trying to provide more amenities in their planes?such
as assigned seating and televisions in the seatbacks of its thirty-seven planes. Another
problem that Southwest is going to face is the airport security hassles and higher ticket taxes,
which will affect Southwest's short-haul routes.
Southwest Airlines does have the opportunity to increase their market share now that larger
carriers like United and U.S. Airways are bankrupt. Southwest needs to compete with the
low-cost carriers to provide more value to the customer.
Use of Information Technology
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