Southwest Airlines Stock Analysis Paper

1271 Words3 Pages
bulb-icon

Recommended: Southwest Airline Case Study

Southwest Airlines Stock Analysis, a Good Investment Southwest overview Southwest Airlines (NYSE: LUV) by revenues, a premier carrier in the United States, ranked the nation’s leading domestic airline. Moreover, the firm focusses on low fares, high frequency, short-hauls, and point-to-point services. The pioneer successful budget airline offers, continually, the cheapest tickets, serves over 100 destinations, employed about 55,700 employees and operate a fleet of 706 Boeing airplanes. Based on positive investment convergence measures, this paper will prove LUV stock rating A-, a BUY. Industry outlook. Today, the air transportation industry prospects remain optimistic. As the market rebound, patrons’ benefit from healthy economic growth, firms …show more content…

This ratio compares a given stock's price to its total sales. More so, this value-focused ratio looks at sales, and the lower the number, the better. Some investors favor this metric over the other value-focused ones because it analyzes Sales, something that is much difficult to exploit with accounting techniques than earnings. Currently, Southwest P/S ratio sits around 1.9, which is noticeably less than the S&P 500 average of 3.5 and slightly below the highs for the past few years stock. For this metrics, the carrier ranges near the upper end, which suggests that the firm has already appreciated relative to sales (Appendix B, figure …show more content…

Southwest postponed its inaugural operation to Hawaii until late 2018 early 2019 owing to processing delays with Federal Aviation Administration (FAA). Investors are watching the rising fuel costs because high fuel costs hurt results for the carrier in the first quarter and fuel expenses may continue rising as GDP growth accelerates. However, its hedge portfolio subsidizes the high increases, but as the year advances, fuel costs are likely to change. With the U.S. economy and lower oil prices continually rebounding, Southwest expects consistent growth, evidently from last travel season, albeit threats from terrorism and

Show More
Related

  • A Case Study: Building Business Agility At Southwest Airlines

    739 Words  | 2 Pages

    Despite its growing domestic network, the company didn’t offer international flights until July 2014, and even then, it only offered limited destinations (“Southwest Corporate Fact Sheet,” n.d.). Furthermore, the company’s reliance on a single aircraft is cause for concern. Southwest Airlines was also weak with technology utilization initially but has since turned this into an asset, as described later. Finally, the company has a limitation with providing customer perks due to its low-cost operations (Ross & Beath,

    Read More

  • Southwest Airlines: A Case Analysis

    1537 Words  | 4 Pages

    Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.

    Read More

  • Southwest Airlines Case Analysis

    1690 Words  | 4 Pages

    More than 37 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. And you know what? They were right. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies over 104 million passengers a year to 64 great cities all across the country, and we do it more than 3,400 times a day.

    Read More

  • Southwest Airlines

    1197 Words  | 3 Pages

    Southwest Airlines is competing with "Shuttle by United" head to head in about 9 routes. United has just announced that it is discontinuing its Oakland - Ontario route and hiking the fares in all the 14 routes by $10, which calculated to be 14.5% increase in the fare. Southwest has to respond effectively to these unexpected developments and has to act accordingly while maintaining their current low fare image and increasing their daily operating profits. We have considered the elasticity of the market to be 1.15.

    Read More

  • Importance Of Southwest Airlines: A Model Of Innovation

    1315 Words  | 3 Pages

    The marketing approach of Southwest Airlines is built upon their strong business model. They have successfully managed to target two specific market segments of the airline industry while remaining profitable. Their strategy is simple, to offer frequent non-stop flights with the lowest costs which appeal to both the business and budget travelers. By segmenting their target audience to specific demographics and ticket pricing, passengers know exactly what they are getting for the price they pay.

    Read More

  • Southwest Airlines

    1119 Words  | 3 Pages

    In the airline industry, Southwest Airlines is considered a true innovator. By shaking up the rules of flying and improving upon inefficient industry norms, Southwest has quickly grown by leaps and bounds. From the very start, Southwest Airlines' goals were to make a profit, achieve job security for every employee, and make flying affordable for more people (Southwest,2007). Southwest has not strayed from these goals. It does not buy huge aircrafts, fly international routes or try to go head to head with the major carriers; and thanks to a great planning, Southwest airlines has become the most successful airline company in the U.S., if not the world.

    Read More

  • Company Analysis: Northwest Airlines

    831 Words  | 2 Pages

    Northwest Airlines is one of the pioneers in the airline transportation industry and is ranked at the fourth largest air carrier in the United States today. The success of the carrier depends on the quality and reliability of the service at a reasonable price. Close competitors force Northwest to innovate their services by increasing efficiency. This essay will try to examine different perspectives in the services needed to successfully complete the company’s objectives. The analysis will explain historical and financial perspectives that may give a better understanding of the current market trend of the organization.

    Read More

  • Southwest Airlines Marketing

    2729 Words  | 6 Pages

    Advertising: As one of the largest domestic airlines, Southwest Airlines has an enormous advertising budget to sustain its presence and increase its market share through focusing on the benefits of flying Southwest over its competitors. Southwest recognizes that flying is no longer a pleasurable experience for many customers, even on Southwest, historically a budget airline. Even though Southwest is often regarded as a no-frills airline, it still attempts to build goodwill from its customers based on its advertising. Of the $249 million it spent on advertising in 2011, Southwest Airlines is unique in that it does not sell additional ad space on the exterior of its aircraft. Many domestic airlines have begun selling aircraft exterior space as a way to increase revenue, but Southwest Airlines insists that it wants to keep its product and advertisi...

    Read More

  • Southwest Airlines Case Study Solution

    707 Words  | 2 Pages

    For years, Southwest Airlines has been experiencing stable costs, low fares and traffic stimulation. However, the latest changes in the marketplace (See Exhibit 1: SWOT Analysis), including the higher energy costs and the entrance of new low fare/cost carriers are threatening the future of the airline. As a result, LUV needs to decide whether or not to acquire the slots and gates from the bankrupt ATA Airlines at LaGuardia (LGA) terminal in New York City (NYC) in order to expand its capabilities.

    Read More

  • Environmental Analysis: Southwest Airlines

    1325 Words  | 3 Pages

    Southwest Airlines is operating in an industry that is struggling to make profits. The slowing economic growth and raising fuel costs are lowering earnings while revenues remain the same. The macroeconomic factors affecting the airline industry include unemployment, the economic growth in the United States, and inflation. With low economic growth, consumers are finding luxury items more difficult to purchase and airline tickets for vacations fall into that category. Unemployment contributes to a lack of vacation travelers since individuals who are not employed do not have extra money for vacation or airline tickets. Inflation also causes operating costs of the airlines to be higher cutting into profits.

    Read More

  • Southwest Airlines

    930 Words  | 2 Pages

    Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.

    Read More

  • Southwest Airlines: Business Creativity and Innovation

    2000 Words  | 4 Pages

    The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.

    Read More

  • Case Analysis On Southwest Airlines

    859 Words  | 2 Pages

    The low cost and no frills strategy is make travel affordable at low cost. The company only operates one type of aircraft which is Boeing 737 to help maintenance cost low. Southwest was the first airline to use E-ticketing in this way customer can reserve spot and buy ticket on their web and allow less expense in printing tickets. Medium measured airports which allowed them to produce better time performance and less fuel costs so plane do not have to wait in the line at the runway. The core value of the company of “LUV and fun” makes the company great place to work that gives customer with a great experience.

    Read More

  • Southwest Airline Merger With AirTran

    1448 Words  | 3 Pages

    Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...

    Read More

  • Cost-Leadership Strategies Of Southwest Airlines: Cost Leadership Strategy

    2676 Words  | 6 Pages

    It all started in 1971, when Rolling King and Herb Kelleher decided to challenge the existing rut of charging high prices for air travels. They considered the railways and roadways their competitors and decided to offer cheaper travel for smaller routes. The company was incorporated in 1967, apart from initial entry troubles, Southwest has been the only US airline to have earned profits since 1973. The eccentric company’s outlandish way of conducting themselves has been the sole reason for Southwest Airlines to succeed in a highly competitive and packed industry.

    Read More

More about Southwest Airlines Stock Analysis Paper

Open Document