Southwest business model

[FWAAA]

Southwest's yields are actually very impressive. As KC said, it's about making profits, not filling every seat with cut-rate bargains like most legacies have been reduced to for the last six years.

WN's Feb PHL load factor was 58.43%, just 8.4 points off its systemwide load factor.

WN isn't always the cheapest - but it's convinced enough customers that it won't gouge them to be successful.

 

[ClueByFour]

its about YIELD.........however, what's surprising is that FACT that load factors are weak. An airline that supposely charges LOW fares, just isnt filling it's planes up.

Given that your airline was upside down on the yield curve until they reduced your wage to slightly more than a kid flipping burgers, I don't think it's exactly wise to be questioning LUV's business prowess. Their employees are laughing (all the way to the bank) at you....

 

[WNrforlife]

Yup - laughing at these guys too....

Southwest Going Nowhere

 

[SKY HIGH]

Given that your airline was upside down on the yield curve until they reduced your wage to slightly more than a kid flipping burgers, I don't think it's exactly wise to be questioning LUV's business prowess.

you havent the slightest idea what my income is. You're assuming. Yet, I work basically 10 days a MONTH, 5 months out of the year, and....<drum roll>....do just fine.

Bother way, minimum wage is 5.15 per hour. http://www.dol.gov/dol/topic/wages/minimumwage.htm

That's $206 per week. 824 per month. Hardly, anyone's full time salary besides your flipping burger boy. try again!


only stating opinions

 

[BuffaloJoe]

you havent the slightest idea what my income is. You're assuming. Yet, I work basically 10 days a MONTH, 5 months out of the year, and....<drum roll>....do just fine.

Bother way, minimum wage is 5.15 per hour. http://www.dol.gov/dol/topic/wages/minimumwage.htm

That's $206 per week. 824 per month. Hardly, anyone's full time salary besides your flipping burger boy. try again!
only stating opinions

Some states are higher! PA will be $7.15 as july 1, up from $6.25.

 

[NewHampshire Black Bears]

There WAS a time, I would have mis-interpeted the Forbes article with a "sadistic grin on my mug".
(I've grown wiser with age, with regard to WN)

WN will ALWAYS be(affectionatly) "WAL-MART with WINGS, to me, ...but...as some one earlier(on this thread) said,...."wake me up when WN posts a $$ loss"(or words to that effect)

My ONLY concern/curiousity about WN, is when the fuel hedge(s) runs out.

So until then (as KCFlyer so astutely(SP? :blink: ) says,..."Long live WN and AA") !!!


NH/BB's

 

[FWAAA]

My ONLY concern/curiousity about WN, is when the fuel hedge(s) runs out.

The way I figure, as the really lucrative hedges expire and are replaced with fuel at closer to market price, WN is still in the drivers' seat.

Soon it will have over 500 737s, and more than 300 of those will be fuel-efficient 737-700s. AA, on the other hand, still has about 300 less efficient MD-80s. Those 737-700s are about 25% more fuel efficient than AA's MD-80s.

Oh, and on top of that, WN will have over 500 airplanes and almost zero debt. You can buy a lot of fuel at market prices when you don't pay anyone any interest on billions of debt.

Those 500 737s still fly primarily short hauls, with relatively high yields, even at WN's non-gouging prices.

Some people like to claim that WN has squandered its fuel hedge savings by undercutting competitors and that with higher fuel prices, it will suffer. To that, I say "nonsense." WN has always undercut its competitors when undercutting them made sense. The fuel hedge savings helped WN buy those hundreds of brand new 737-700s for cash just as AA's daunting MD-80 replacement project is looming.

So one of these days, WN will buy fuel for market prices. But for a long time, it will buy a lot less fuel per 137 seats than AA will. Same with all the other legacies that need to buy new fuel efficient airplanes. Add to that the legendary vague "efficiency" at WN - it flies more ASMs with fewer employees at higher wages than most other airlines. Its management seems to know how to make money when others can't.

I don't fly WN a lot, but nothing beats BUR-LAS/SJC/PHX/ABQ both on price and convenience. Saves me from driving all the way to LAX and flying in a 50 seat lawn dart Eagle RJ to SJC. AA doesn't fly from LAX to places like PHX or ABQ. High frequency and low fares. I get enough AAdvantage miles/status from long flights where upgrades make a difference, so one-hour flights across the southwest on southwest doesn't cause me to miss out on status qualification. You won't find me on 4-stop WN transcons.

To be certain, the expiration of the ultra-cheap hedging contracts will make things a little more challenging for the WN team. So instead of running on a level playing field, WN will now have a 2% grade to climb. All while the competiton is trying to run the same distance on the same 12% incline it's been on since 1978. I predict another 35 profitable years. B)

 

[CK2795]

I really don't know of any airline that's running at 100% passenger capacity, but as long as my SWA paycheck is strong, my profit sharing check arrives (as it always has) and my 401k is growing (as it always has...especially due to the company match), I wouldn't worry too much about SWA. Oh, and if you need me to define profit sharing...just ask. LONG LIVE LUV!

The way I figure, as the really lucrative hedges expire and are replaced with fuel at closer to market price, WN is still in the drivers' seat.

Soon it will have over 500 737s, and more than 300 of those will be fuel-efficient 737-700s. AA, on the other hand, still has about 300 less efficient MD-80s. Those 737-700s are about 25% more fuel efficient than AA's MD-80s.

Oh, and on top of that, WN will have over 500 airplanes and almost zero debt. You can buy a lot of fuel at market prices when you don't pay anyone any interest on billions of debt.

Those 500 737s still fly primarily short hauls, with relatively high yields, even at WN's non-gouging prices.

Some people like to claim that WN has squandered its fuel hedge savings by undercutting competitors and that with higher fuel prices, it will suffer. To that, I say "nonsense." WN has always undercut its competitors when undercutting them made sense. The fuel hedge savings helped WN buy those hundreds of brand new 737-700s for cash just as AA's daunting MD-80 replacement project is looming.

So one of these days, WN will buy fuel for market prices. But for a long time, it will buy a lot less fuel per 137 seats than AA will. Same with all the other legacies that need to buy new fuel efficient airplanes. Add to that the legendary vague "efficiency" at WN - it flies more ASMs with fewer employees at higher wages than most other airlines. Its management seems to know how to make money when others can't.

I don't fly WN a lot, but nothing beats BUR-LAS/SJC/PHX/ABQ both on price and convenience. Saves me from driving all the way to LAX and flying in a 50 seat lawn dart Eagle RJ to SJC. AA doesn't fly from LAX to places like PHX or ABQ. High frequency and low fares. I get enough AAdvantage miles/status from long flights where upgrades make a difference, so one-hour flights across the southwest on southwest doesn't cause me to miss out on status qualification. You won't find me on 4-stop WN transcons.

To be certain, the expiration of the ultra-cheap hedging contracts will make things a little more challenging for the WN team. So instead of running on a level playing field, WN will now have a 2% grade to climb. All while the competiton is trying to run the same distance on the same 12% incline it's been on since 1978. I predict another 35 profitable years. B)

Well said! Challenges face every airline. SWA is no different. We've proved our staying power before and we'll prove it well into the future.

 

[KCFlyer]

You won't find me on 4-stop WN transcons.

YOu won't find many others on those, since they don't operate them. They pretty much now have one-stop transcons.

 

[CO738]

If it weren't for hedges, WN wold be in the red ink. I think that is why Gary seems so concerned with revenue these days - in flight wifi being the next gimick.

 

[swflyer]

If it weren't for hedges, WN wold be in the red ink. I think that is why Gary seems so concerned with revenue these days - in flight wifi being the next gimick.

Thanks for posting your valuable comment!! <_<
Hint: www.m-w.com

 

[ramper_in_las]

Their employees are laughing (all the way to the bank) at you....

The rhetoric that is being thrown out there as if WN employees actually think this way. I need to set ya'll straight. None of my fellow employees, myself included think this way. We all would like to see success within our volatile industry. A successful industry leads to all of us providing a high standard in quality of life for our families.

I am not understanding why all of you posters are just waiting for WN's demise. Look WN has been in business for 36 years. The legacies chose to ignore us which has allowed WN to grow into what it is today. A force to be reckoned with. If the legacies would have come up with a better business plan instead of worrying about what their year to year bonuses were going to be, maybe the legacies would be in a better situation. Lets be frank, if it wasn't for the shield of bankruptcy how many carriers would be out of business right now. Rightfully I think they should be out of business. If legacies couldn't run an airline pre 9/11 how exactly are they going to be successful post 9/11. By continually entering into Bankruptcy protection. This is unacceptable. The government needs to let the natural progress of attrition run its course.

Yup - laughing at these guys too....

Southwest Going Nowhere

these analyst ASSuME that passengers are its only source of income :down:

To be certain, the expiration of the ultra-cheap hedging contracts will make things a little more challenging for the WN team. So instead of running on a level playing field, WN will now have a 2% grade to climb. All while the competiton is trying to run the same distance on the same 12% incline it's been on since 1978. I predict another 35 profitable years. B)

Here is the Unknown variable, GWB will be put of office soon and oil prices will only head one way :down: Mark my words!!!

If it weren't for hedges, WN wold be in the red ink. I think that is why Gary seems so concerned with revenue these days - in flight wifi being the next gimick.

WHAT!!! Gary is always concerned with the number he is an accountant after all. I am glad he is always looking to the future. wifi??? NOT!!!

 

[formeraa]

Southwest started out with a low-cost business model. It was a necessity on intra-Texas routes where they were competing with the automobile and Greyhound. After airline deregulation, they acquired a couple of airlines and carefully expanded their low-cost model (never deviating). WN continues to be a very successful low-cost airline.

On the other hand, the legacy airlines started out as higher cost airlines with lots of investments in infrastructure, in-flight service, airport service, etc. They were, in essence, full service carriers. In the deregulated environment, the legacy carriers have cut costs as much as possible. However, they are still encumbered by higher cost items such as international flights, mixed fleets (a necessity to serve international flights), etc.

It's basically the same struggle as retailers have these days. Walmart is the low-cost, price leader (and recently their results have been a bit lagging just like WN). All the other retailers have difficulties competing in the Walmart era.

 

[NewHampshire Black Bears]

ramper in las,

I don't think i've ever agreed with you so much, as I am on your last post.

I sincerely DON'T want to see job(harm) come to anyone...But there is a part of me that want's to see the "law of the jungle" do It's natural thing.

As an ex AAer, I think WN serves a usefull purpose in the Industry(checks and balances if you will).

With the exception of NW and AA, Everyone else(at one time or another) has made a fool ($$$) of themselves trying to emulate WN.(and that is ultimately GOOD for AA)(and WN)

I would have given anything, to sit in on some of the "after work" ...."talking shop" sessions, that Crandall & Kelliher HAD over Wild Turkey, and a ton of cigaretts !!

But thats what these north texas neighbors have been doing, this past quarter CENTURY !!!!!!!!!!!!!


(As the KCFlyer says).........LONG live WN and AA !!!!!!!!

NH/BB's

 

[WNrforlife]

Rightfully I think they should be out of business.

And why should anyone give a flip what you think?

With the exception of NW and AA, Everyone else(at one time or another) has made a fool ($$$) of themselves trying to emulate WN.(and that is ultimately GOOD for AA)(and WN)

Oh yeah, that purchase of Reno Air was a real good move....NOT!!! :down:

What a joke you are.