southwest airlines

With a quirky culture and a fleet of more than 500 Boeing 737s, Southwest Airlines has come to dominate domestic air travel in the United States. Its fares influence other airlines in many markets. Other low-cost carriers, notably AirTran and JetBlue, have copied and in some ways improved on Southwest's no-frills service. And its conservative financial management — it is the only major airline to have hedged most of its fuel needs — has kept it the only big airline to be consistently profitable.

In 2008, however, Southwest faces big challenges. Network airlines like American and United have reduced their costs, some by going through bankruptcy, allowing them to report profits in some quarters while competing directly against Southwest. Southwest needs to update its service, offering Internet connections or other tools on planes to attract business travelers. And its growth has slowed. That means it is hiring fewer new, lower-wage employees, pushing its average wages up and raising its costs. It faces negotiations with worker unions over new contracts that could further increase expenses.Meanwhile, its founder and chairman, Herb Kelleher, and its president, Colleen Barrett, are both scheduled to retire from Southwest's board this year. While Gary C. Kelly has been chief executive since 2004, Mr. Kelleher and Ms. Barrett are the connection to Southwest's past and to its raucous culture. Mr. Kelly, a former certified public accountant who rose up on the financial side of Southwest, has worked to also embody the irreverent culture — dressing up like Edna Turnblad, the bouffant mom from the musical "Hairspray'' for last October's headquarters Halloween party. The question is if he can keep Southwest standing out from the competition by as much. — Jeff Bailey, Feb. 12, 2008.



Post a Comment