...Strategic Report for Southwest Airlines Tycen Bundgaard John Bejjani Edmund Helmer April 12, 2006 Table of Contents EXECUTIVE SUMMARY............................................................................................... 3 COMPANY BACKGROUND ....................................................................................... 6 PORTER’S FIVE FORCES............................................................................................ 10 MARKET DEFINITION .............................................................................................................. 10 INTERNAL RIVALRY ................................................................................................................. 11 ENTRY ....................................................................................................................................... 12 SUBSTITUTES AND COMPLEMENTS ........................................................................................ 14 SUPPLIER POWER ..................................................................................................................... 15 BUYER POWER .......................................................................................................................... 18 FINANCIAL ANALYSIS.............................................................................................. 19 OPERATION FINANCIALS .................................................................................
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...“Marketweek” column reads, “Airlines and other money-losing companies.” 1 This tag line reflects the intense rivalry and the massive financial losses undergone in the airline industry in the past few months due to the economic recession and the 9/11 terrorists attacks. Amidst this airline industry malaise, however, JetBlue Airlines (”JetBlue”) launched service in February 2000 and generated over $41 million in profits in 2001.2 In this report, we explore the question, “Is JetBlue’s strategy conducive to sustaining profitability?” The answer is a resounding “Yes”. At the one thousand foot level, we believe that even in the unattractive airline industry in which companies try to differentiate on qualities other than price -- but in the end often compete on price -- JetBlue has a unique formula for success. It competes head-to-head with the majors, particularly Southwest Airlines (“Southwest”), on price, cost structure, features, and customer satisfaction. However, the company has carved a niche in which a “live and let live” strategy should prevail. Indeed, a rival attempting to bankrupt JetBlue may well cause more harm to itself than to its target. Airline Industry Overview Background At one time the airline industry resembled the utility industry to the extent that regulators determined what firms could and could not do. In the 1970s, a time of runaway inflation, and rising unemployment, many agreed that something had to change. In 1978 Congress passed the Airline Deregulation Act, which...
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...WEEK 9 Jonathan Jackson Dr. Daniel Terfassa 9/11/2015 FIN 534 Introduction Southwest Airlines was founded in 1971 by Herb Kelleher and Rolling king. The company started its services for San Antonio, Dallas and Houston. In the mid-1980s, the company was first to offer the frequent miles program. This program allowed travelers to bank traveled air miles to be used latter credit for a reduced airfare or free ticket. It was the first airline company to offer senior discounts, fun packs and fun fans. From 1981 to 1984, the company continuously received the top ranking of number 1. By 1998 Southwest Airlines had become 5th largest US air carrier, caring more than 50 million passengers per year servicing the Southwest and Northwest and other primary locations all across the United States. In 1987, the company took over TranStar Airlines and Morris Air in 1994. This gave Southwest Airlines a stronger edge in the market. Originally the company was incorporated for serving three cities in Texas as Air Southwest on March 15, 1967, by Herb Kelleher and Rollin King. The airline experienced a great history of success, it adopted the first profit sharing plan in the US airline industry 1971. Employees own almost 10% of the company stock through this plan and others as well the company is almost 87 percent unionized. The pilots are represented by the pilot association of Southwest Airlines which is a union separate from the much larger Air Line Pilots Association. Rationale...
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...University Southwest Airlines Case Study Analysis MBA 6143: Entrepreneurial Leadership August 17, 2012 Abstract This paper analyzes Southwest Airlines Case Study. Southwest Airlines was originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herb Kelleher. Leadership at Southwest Airlines plays a paramount role in the success of the company. Before its role is discussed in detail though, a definition of leadership will provide a foundation for the rest of this analysis. The paper explains the Southwest Airlines company history, background of the company, the role of leadership at Southwest Airlines, how culture is displayed at the company, competitive dimensions, leadership practices of CEO, recasting the role of the CEO, and 21st century entrepreneurial leader. Keywords: 21st century entrepreneurial leader, Southwest Airlines, Leadership, CEO Company History Southwest Airlines was originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herb Kelleher. According to frequently-cited story, King described the concept to Kelleher over dinner by drawing on a paper napkin a triangle symbolizing the routes (Dallas, Houston, and San Antonio). Some of the incumbent airlines of the time (Braniff, Aloha Airlines, United Airlines, Trans-Texas, and Continental Airlines) initiated...
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...What is an IPO and why is it such a big deal? Is this a good idea for JetBlue? Explain. When a privately held company makes its stock available to the general public for the first time on a securities exchange, this is known as the company’s Initial Public Offering (IPO). The IPO can consist of an initial issue of either debt or equity. The IPO process is also referred to as a private company “going public”. There are numerous benefits associated with going public. IPO benefits include enlarging and diversifying a company’s equity base, allowing cheaper access to capital, improving public image, attracting better management and employees through stock options, enabling transfer of company ownership through mergers/acquisitions, and providing increased financing opportunities (through equity, convertible debt, bank loans, etc.). IPO Process Executing an IPO is an extensive, time-consuming, and complicated process for the senior management team of a company. The main steps of the process are outlined below: • Hire an investment bank as an underwriter—the underwriters’ purpose is to negotiate ways to raise capital (by either debt or equity) and interface with the public. (In JetBlue’s case, the underwriter was Morgan Stanley.) • Begin to negotiate with the underwriters about all the required information that will be contained in the underwriting agreement. This information includes the amount of capital the company wants to raise, types of securities that will be issued...
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...Southwest Airlines Research Report Tommy Best - Jessica Johnson - Adam McCormick Laura Monday - Evvan Tolly - Jessica Wirth Mary Wrenn ADV 340 - Dr. Childers - Fall 2009 Table of Contents Industry Overview Introduction....................................................................................................................................................................................................................... 1 History............................................................................................................................................................................................................................... 2 Size of Industry.................................................................................................................................................................................................................. 2-3 Stage in Product Life Cycle.................................................................................................................................................................................................. 3-4 Seasonality......................................................................................................................................................................................................................... 4 Growth Potential/Forecasts..........................................................................................................
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... start with a billion dollars and launch a new airline…” - Richard Branson, founder of Virgin Atlantic Airways Team Members: Brad Anen brad.anen@yale.edu (203) 865-6166 % Returns Over the Last 12 Months (Prices are as October 7, 2002) mike.bizzario@yale.edu (203) 675-9244 Begonya Klumb begonya.klumb@yale.edu (203) 772-0718 Carla Sayegh carla.sayegh@yale.edu (203) 773-1177 Portfolio Manager: Sean O’Dowd Sean_odowd@yale.edu Airline Index (^XAL): S&P 500: JetBlue (JBLU): (59.80)% (26.70)% (20.73)% JBLU Current Price: JBLU Target Price: $35.75 $29.44 Projected (Short) Return: Mike Bizzario 17.65% Yale School of Management Page 2 of 17 RECOMMENDATION: SELL • • • • Short-lived, well-funded track record is unsustainable in current economic climate. Threat to cost structures within airline industry due to potential invasion of Iraq and resultant oil price increases. Immediate shorting opportunity due to overvaluation as compared to the industry (JetBlue P/E ratio is higher than the industry average by 18%) valuation ratios. Height of financial performance is already reflected in the JBLU’s stock price, and we are bearish about future financial prospects. Inherent company risks include high leverage, dependence on JFK hub as key revenue driver and IPO-lock-up expiration in the near term. Historical Context • JetBlue is the best-capitalized airline in start-up history. It has a short but impressive...
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...Contents South West Airlines 4 Goals and Objectives 5 Their Mission and Vision Statement 5 Strengths 6 Weaknesses 6 Opportunities 8 Threats 8 Analyzing company’s external environment 9 Analyzing the nature and strength of competitive forces 11 Competitive pressure stemming from bargaining power of buyer: 16 Determining whether the collective strength of the five competitive forces is conductive to good profitability: 17 Competitive pressure from seller of substitute products 18 Sign that competition from substitute is strong 19 Competitive pressure stunning from supplier bargaining power 20 PESTEL ANALYSIS 24 SCENARIO PLANNING 56 SCENARIO NO.1 58 SCENARIO NO.2 59 SCENARIO NO.3 59 SCENARIO NO.4 60 SCENARIO NO.5 60 SCENARIO NO.6 60 SCENARIO NO.7 61 SCENARIO NO.8 61 Competitors Objectives 62 Competitor's Current Strategy 63 Competitor's Resources and Capabilities 64 Competitor’s Assumptions 66 Regional Factors 67 Value chain activities: 68 Key competitive advantages: 72 Solutions: 82 Weights of Key success factors in five airlines: 86 COMPETITIVE ADVANTAGE 92 FIVE GENERIC COMPETITIVE STRATEGIES: 92 LOW COST PROVIDER STRATEGIES: 92 DIFFERENTIATION STRATEGIES: 95 BEST-COST PROVEDER STRATEGIES: 96 FOCUS (MARKET NICHE) STRATEGY: 96 STRATEGIC ALLIANCE AND PARTNERSHIP: 97 MERGER AND ACQUISITION STRATEGIES. 98 VERTICAL INTEGRATION. 98 OUTSOURSING. 98 OFFENSIVE...
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...SOUTHWEST AIRLINES CO. 2011 ANNUAL REPORT TO SHAREHOLDERS To our Shareholders: The year 2011 was historic for Southwest Airlines. We celebrated our 40th anniversary of providing low-fare, high quality commercial air service. We launched an all new, industry-leading, frequent flyer program in March. We opened three new cities: Greenville-Spartanburg, South Carolina; Charleston, South Carolina; and Newark, New Jersey. We closed our acquisition of AirTran Airways on May 2, growing our fleet by 140 aircraft, and extending our route network domestically and to the Caribbean and Mexico. In December, we unveiled our fleet modernization plans, which include an agreement with Boeing to serve as the launch customer of the 737 MAX aircraft. And, our operations improved in 2011, closing out the year with our highest December ontime performance in 15 years. Moreover, we reported our 39th consecutive annual profit in a year that endured a $1.7 billion year-over-year increase in combined economic fuel costs. Our 2011 net income was $178 million, or $.23 per diluted share, including special items (primarily noncash, mark-to-market, and other items required for a portion of the Company’s fuel hedge portfolio, as well as costs associated with the acquisition and integration of AirTran). Excluding special items, our 2011 profit was $330 million, or $.43 per diluted share. Our financial position remains strong. Our cash and short-term investments were $3.1 billion, as of December 31, 2011, in...
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...SOUTHWEST AIRLINES CO. 2013 ANNUAL REPORT TO SHAREHOLDERS To our Shareholders: Our goals for 2013 were ambitious. We wanted to stay on track with our five Strategic Initiatives described below. We wanted to maintain our strong Brand, unique Culture, and award-winning Customer Service. We wanted to sustain our strong ontime performance and baggage handling. Finally, we wanted to improve our cost performance, achieve our profit requirement, and return value to our Shareholders. Just like in 2011 and 2012, an enormous amount was accomplished in 2013. As a result, we produced stellar results. Our 2013 net income was a record $754 million, or $1.05 per diluted share, including special items (primarily noncash, mark-to-market, and other items required for a portion of the Company’s fuel hedge portfolio, as well as costs associated with the acquisition and integration of AirTran). Excluding special items1, our 2013 profits were also a record, increasing 93 percent year-over-year to $805 million, or $1.12 per diluted share. Our annual pre-tax return on invested capital, excluding special items (ROIC), was 13.1 percent, nearly doubling 2012’s performance. Total operating revenues were a record $17.7 billion, boosted by strong yields and an 80.1 percent load factor. Through the combination of stable fuel prices and rigorous cost control efforts, we met our goal to improve our cost performance. Despite a roller coaster economy, we achieved record earnings; and, while just short of our...
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...The University of the West Indies, St. Augustine Faculty of Social Sciences Department of Management Studies M.Sc. Aviation Management AVMT 6001 – Accounting for Business Decisions AVMT 6001 – Group Project 2 Managerial Accounting - JetBlue Airways Corporation Group Members: Cherrish Bridgemohan - 807001633 Rajiv Debie - 04708006 Israel Duncan - 814004144 Kenrick Duncan - 814002425 Neil Shepherd - 814004177 Signatures: Cherrish Bridgemohan ___________________________ Rajiv Debie Israel Duncan Kenrick Duncan Neil Shepherd ___________________________ ___________________________ ___________________________ ___________________________ November 16, 2014 Table of Contents I. II. Table of Abbreviations ........................................................................................................................ 5 Executive Summary............................................................................................................................ 6 III. Introduction......................................................................................................................................... 7 IV. Background – JetBlue Airways ......................................................................................................... 7 V. Management Accounting Information.............................................................................................. 8 Financial Accounting versus Management Accounting ...........................
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...September 18, 2012 Mr. Patrick Heck Deputy Chief Financial Officer Denver International Airport 201 West Colfax Avenue Denver, Colorado 80202 Re: The Westin Denver International Airport – Denver, Colorado Dear Mr. Heck: Pursuant to your request, we have conducted a study of the potential market demand and developed a statement of the estimated annual operating results for a proposed 519-room Westin hotel (the “Subject”) to be located at the south terminal of the Denver International Airport (“DIA”) in Denver, Colorado. Throughout this analysis, we formally refer to the Subject as The Westin Denver International Airport. The development of the Subject hotel is expected to be financed through the issuance of tax-exempt bonds coupled with some form of public subsidies/guarantees/loans. This report has been prepared for use by the Denver International Airport and its financial advisors in determining the estimated annual operating results of the proposed Subject. The conclusions set forth in this report are based on an analysis for supply and demand for the transient lodging market in the Denver-Aurora market area as of August 8, 2012, the completion date of our fieldwork and primary market research. As in all studies of this type, the estimated results assume competent and efficient marketing and operational management, and presume no significant change in the status of the competitive lodging industry from that as set forth in this report. The terms of this engagement are...
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...UNIVERSITY OF INNSBRUCK Master Thesis Employee Branding How do brands affect employees? Master Program: Organizational Studies Author: Luisiana Garza Jordàn 0817703 Acknowledgements I would like to thank the University of Innsbruck for the education it has provided me for the past two years. During this program I have had the opportunity to grow professionally and personally. To my colleagues for sharing knowledge and experiences… Recognition should also go out to Evalueserve, the company I worked with during my research; for the time and access to the organization in order to complete this thesis. Dr. Iain Munro, my professor and advisor, for the time, input, proofreading and recommendations. This thesis would not have been the same without his support. Ich möchte mich auch besonders bei meiner langjährigen Freundin Sigrid Granitzer bedanken, die bei Evalueserve angestellt ist. Sie war nicht nur mein Hauptkontakt zur Firma, sondern auch eine besondere Person in meinem Leben, die mich die ganzen zwei Jahre meines Studiums in Österreich begleitet hat. Für ihre Hilfe, Zuspruch und Unterstützung... Esta tesis esta dedicada especialmente a las personas más importantes de mi vida; mi familia, Papá, Mamá, Any, y José. Ustedes son mi apoyo, motivación, inspiración, y ejemplo a seguir. Esta es sólo una meta más que logramos como equipo. Sin ustedes no hubiera sido posible. Papá, papelito habla… y este es el mío. Los quiero… i Declaration in Lieu...
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...Walmart Customer Loyalty Program Save Money, Live Better, Reward Yourself! Travis Godderidge Rick Hayes Darrell Johnson Chad Mikels HBM 581 Services Management Section 2 Team 5 February 24, 2013 [Type text] Table of Contents Executive Summary Background Research Companies researched, program names and descriptions Description of the Proposed Program Company overview Target customers Suggested Program Names Features and Benefits Terms and Conditions Duration of the Program Initiating and Marketing Tracking Device for Customers Estimates costs to implement and sustain the loyalty program Summary and Recommendations References 1 2 3 8 9 9 9 10 11 12 13 14 15 16 Executive Summary In the fierce world of global discount retail competition, differentiation is critical to long term success and survival. Walmart was founded on the differentiating factor of the lowest prices for the highest quality products. While this has served Walmart well and will continue to do so with global sourcing and supply chain management to secure the best products at the best prices, an expansion of the services provided to the customer and the ability to obtain demographic spending information and trends will prove invaluable to Walmart’s continued success and rapid global expansion. Additionally, programs that help retain customers once the customer has entered the store will increase market share more rapidly and increase...
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...Administrator Assistant Secretary for Aviation and International Affairs Date: September 24, 2012 From: To: Since its inception, the aviation industry has undergone significant transformations as a result of technological developments, economic pressures, and other factors. Most recently, economic recession and recurrent high fuel costs have challenged U.S. airlines, which have taken a number of actions to lower costs and increase revenue—including capacity reductions, fare increases, baggage fees, and mergers. Beginning in 2002, the Office of Inspector General has issued periodic reports regarding the performance of the aviation industry. This report, the 11th in the series, focuses primarily on industry performance during the 2008–2011 period and summarizes long-term trends since 2000. This report also highlights issues related to changes in airlines’ business environment, the industry’s reactions to those changes, and the impact of these actions on the traveling public. Finally, this report includes exhibits with more than 40 statistical charts (or metrics) organized in five areas: airline finances, air traffic, flight service, delays and cancellations, and customer service. 1 For a detailed discussion of our scope and methodology, see exhibit A. 1 For a list of all exhibits included in this report, see the Table of Contents on page 15. 2...
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