A few negative drops in the LUV Ocean does not make a tsunami.
WN financials hit headwinds
- Thread starter WorldTraveler
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OP
WorldTraveler
Corn Field
- Dec 5, 2003
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It's all about perspective. WN does have a formidable track record on which to stand and they have indeed succeeded CONSISTENTLY in an industry where inconsistency and short-term successes followed by long-term losses are more the norm. I have never discounted what WN has accomplished.
But some people here can't acknowledge that WN doesn't have the same advantages it once had... fuel prices are much higher and WN doesn't have the kind of hedges that fueled its profitability for a number of years... other large airlines have costs as low as and in some cases lower than WN... and WN is now having to operate in the operationally difficult and competitive east coast markets where the WN operational formula doesn't work quite as well as it did in the traditional secondary and western airports where good weather makes running the operation a lot easier.
The combined result - on top of the merger - is that WN's financial performance is below average for the industry. Says nothing about the quality of the people or their ability to solve problems... just that WN is in the midst of a significant strategic transition which will require alot of work to overcome. Since other airlines have gone through some of those same transitions in the past, they are now positioned to move forward while WN has to slow its historic aggressiveness in the market and focus on fixing the business.
I have consistently stated that WN is a well-run business and they will adapt... but no one can rest on their laurels and WN must now do some of the tough work of adapting to the market and making mergers work - stuff that other airlines did years ago. WN will adapt and will succeed - but it doesn't change that on a comparative basis they don't look as much of a standout compared to the industry as they once were.
But some people here can't acknowledge that WN doesn't have the same advantages it once had... fuel prices are much higher and WN doesn't have the kind of hedges that fueled its profitability for a number of years... other large airlines have costs as low as and in some cases lower than WN... and WN is now having to operate in the operationally difficult and competitive east coast markets where the WN operational formula doesn't work quite as well as it did in the traditional secondary and western airports where good weather makes running the operation a lot easier.
The combined result - on top of the merger - is that WN's financial performance is below average for the industry. Says nothing about the quality of the people or their ability to solve problems... just that WN is in the midst of a significant strategic transition which will require alot of work to overcome. Since other airlines have gone through some of those same transitions in the past, they are now positioned to move forward while WN has to slow its historic aggressiveness in the market and focus on fixing the business.
I have consistently stated that WN is a well-run business and they will adapt... but no one can rest on their laurels and WN must now do some of the tough work of adapting to the market and making mergers work - stuff that other airlines did years ago. WN will adapt and will succeed - but it doesn't change that on a comparative basis they don't look as much of a standout compared to the industry as they once were.
num1bearsfan
Member
- Aug 1, 2008
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Southwest has been in a constantly evolving and adapting state since the day the company was founded. The way you're talking makes it sound like Southwest Airlines has had one singular advantage over the industry since the beginning and now it's not there anymore. They've certainly NEVER been one to rest on their laurels. There's more tweeking and improving happening at Southwest Airlines every single day than you could possibly even know.
Southwest does what it wants to do, and frankly pays very little attention to what the other airlines have to say about it. More or less "competition" is in the minds of the "competitors". If Southwest sees a city pair that makes sense, they operate it.. Doesn't matter who's there already. At the end of every quarter, there is usually a profit.. I mean that really is the bottom line.. As long as that's the case, whatever else you're talking about really doesn't matter..
OP
WorldTraveler
Corn Field
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I appreciate your loyalty to WN but the facts are very plain that WN DOES NOT have competitive advantage it once had... WN has to evolve and I never doubted they would, but they also generated revenues and maintained costs such that they had a very comfortable distance between themselves and their competitors.
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As much as you and others might not want to hear it, DL handedly outperformed WN in 2011 - and it isn't just attributable to FL. DL's RASM growth was far stronger than WN's and WN's non-fuel cost advantage relative to DL is only about 5%. And while international systems have been a big drag for other carriers in the past, DL has done a very good job of solid financials for all of its network including its international network which WN does not have. We haven't heard from all of the network carriers but US - which is the least international network carrier - also delivered much stronger revenue performance than WN.
When you consider that WN's ability to grow in its traditional secondary hubs like MDW and DAL and in smaller markets are for now limited, forcing them to compete in much higher profile and competitive markets like ATL, DEN, LAX, and NYC, WN does in fact have some major strategic challenges ahead of it.
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NO one doubts what WN has accomplished in the past or that they will be able to overcome the current challenges they face, but we have yet to see that WN can in fact do that - and for now some of WN's network carriers. WN is not increasing capacity in the near future - which is rare for WN - and has acknowledged that it will take several years to fully integrate FL which limits WN's ability to move forward with internal strategies that WN has typically used as a competitive advantage.
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It is also noteworthy that DL spent about 20 cents per gallon on jet fuel than WN... the airline that gained so much strategically just a couple years ago against its network competitors now finds itself with a much smaller cost advantage.
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By the way, I am not the only one who recognizes that WN is not performing like it once did, and that other competitors are delivering stronger financials than WN.
http://www.fool.com/investing/general/2012/01/23/heres-1-reason-southwest-airlines-looks-weak.aspx
The fact that WN's market cap now is about $1B or more than 10% less than DAL says alot. esp. when WN's market cap not many years ago was more than the combined total of the entire US network carrier segment.
.
As much as you and others might not want to hear it, DL handedly outperformed WN in 2011 - and it isn't just attributable to FL. DL's RASM growth was far stronger than WN's and WN's non-fuel cost advantage relative to DL is only about 5%. And while international systems have been a big drag for other carriers in the past, DL has done a very good job of solid financials for all of its network including its international network which WN does not have. We haven't heard from all of the network carriers but US - which is the least international network carrier - also delivered much stronger revenue performance than WN.
When you consider that WN's ability to grow in its traditional secondary hubs like MDW and DAL and in smaller markets are for now limited, forcing them to compete in much higher profile and competitive markets like ATL, DEN, LAX, and NYC, WN does in fact have some major strategic challenges ahead of it.
.
NO one doubts what WN has accomplished in the past or that they will be able to overcome the current challenges they face, but we have yet to see that WN can in fact do that - and for now some of WN's network carriers. WN is not increasing capacity in the near future - which is rare for WN - and has acknowledged that it will take several years to fully integrate FL which limits WN's ability to move forward with internal strategies that WN has typically used as a competitive advantage.
.
It is also noteworthy that DL spent about 20 cents per gallon on jet fuel than WN... the airline that gained so much strategically just a couple years ago against its network competitors now finds itself with a much smaller cost advantage.
.
By the way, I am not the only one who recognizes that WN is not performing like it once did, and that other competitors are delivering stronger financials than WN.
http://www.fool.com/investing/general/2012/01/23/heres-1-reason-southwest-airlines-looks-weak.aspx
The fact that WN's market cap now is about $1B or more than 10% less than DAL says alot. esp. when WN's market cap not many years ago was more than the combined total of the entire US network carrier segment.
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