The future of Southwest Airlines

[GhettoBeechjet]

Here is what we know about WN today.

1. Costs are way up
2. Legacy Airtran employees largely disgruntled
3. Loss in PHL to USAirways
4. Merger not going as planned
5. Losing to DL in ATL
6. Financial performance well below any peers.
7. Losses in Pac NW to Alaska
8. Hawaii opportunitys gone to DL AK and Allegiant
9. Loss of other markets to JB, Allegiant, and Spirt

WN is at a tipping pint. For a long time WN and its employees have not truely felt the pains of the industry. Does managements grand plan come together or do the wheels come off the bus?

 

[scoreboardII]

I think everyone at WN should tipping a pint.

 

[BILL LUMBERG]

Charging for bags fixes it all....

Southwest won't lose money...period......time to move along.

(No Sniping Scoreboard......I'm on your side!)

 

[texman]

It makes me wonder why our last CFO retired, and have had several VP's leave the company. Trying to stay positive.

 

[Dude]

Southwest Airlines doesn't have a cost problem, they have a revenue and execution problem.

 

[A350]

The demise of SWA has been predicted for YEARS. They could lose money for YEARS with their balance sheet and those YEARS would be hell for the larger trunk carriers as they deal with their own increasing costs.

They may have some issues.....but they have a lot of options.

(ps....I don't work for SWA)

 

[johnsonrod]

Assigned seats - and start charging for preferred seat assignments like Air Trash currently does. Big cash!

 

[General Lee]

Charging for bags fixes it all....

Southwest won't lose money...period......time to move along.

(No Sniping Scoreboard......I'm on your side!)

They can't Bill, that fat SWA Captain on the "People's Court" commercial said "SWA would NEVER do that......" Was he lying?


Bye Bye---General Lee

 

[BILL LUMBERG]

That commercial was one of the few that didn't make me laugh.....totally stupid.

We should have a Senate inquiry ala Bangazi if he DID lie =).

Not trying to be the guy who stalks SWA threads, Ill save that for GL...

 

[scoreboardII]

Charging for bags fixes it all....

Southwest won't lose money...period......time to move along.

(No Sniping Scoreboard......I'm on your side!)

wtfo, I agree with you...

 

[Ty Webb]

The rumors of our demise have been greatly exaggerated.

 

[Ky.BrownBourbn]

Charging for bags fixes it all....

Southwest won't lose money...period......time to move along.

(No Sniping Scoreboard......I'm on your side!)

"Mr. Lumberg, We need you to step in this office. Can you please fill the cup past the redline and place on the back of the toilet and DO NOT FLUSH the toilet!"

You are actually not bashing SW, I think it's time for a drug test...

NOW if General Flee does the same, FI is over, done, they might as well shut down this place down...

BUT we know that's not gonna happen, SHE can't keep quit if she tried!

Later,
KBB

 

[BILL LUMBERG]

Really Bourbon? lump me with GL?

I thought we were friends!

 

[fam62c]

Here is what we know about WN today.

1. Costs are way up
2. Legacy Airtran employees largely disgruntled
3. Loss in PHL to USAirways
4. Merger not going as planned
5. Losing to DL in ATL
6. Financial performance well below any peers.
7. Losses in Pac NW to Alaska
8. Hawaii opportunitys gone to DL AK and Allegiant
9. Loss of other markets to JB, Allegiant, and Spirt

WN is at a tipping pint. For a long time WN and its employees have not truely felt the pains of the industry. Does managements grand plan come together or do the wheels come off the bus?

SW just needs to decide what it wants to be now that is all grown up. They haven't had to adapt much in the past because they had a successful formula which still works but just not quite as well anymore. They still have a powerful domestic route system and a a large economy of scale as well as a strong balance sheet, they just need to figure out how to leverage their strengths against the competition. It seems like they are not as aggressive of a competitor as they once were.

From a business standpoint they are in a similar situation as WalMart. They have what was once a nearly perfect business concept that is now showing it's age as competitors are figuring out how to compete more effectively. The question is do they adapt and change with the times or go the way of Sears and eventually become irrelevant? I think in the case of SW the purchase of AT, even though the integration has been somewhat botched so far, is an indication of a willingness to acknowledge the need to adapt even though they may not be to the point of really embracing change yet.

 

[humveedriver]

Here is what we know about WN today.

1. Costs are way up
2. Legacy Airtran employees largely disgruntled
3. Loss in PHL to USAirways
4. Merger not going as planned
5. Losing to DL in ATL
6. Financial performance well below any peers.
7. Losses in Pac NW to Alaska
8. Hawaii opportunitys gone to DL AK and Allegiant
9. Loss of other markets to JB, Allegiant, and Spirt

WN is at a tipping pint. For a long time WN and its employees have not truely felt the pains of the industry. Does managements grand plan come together or do the wheels come off the bus?

It's refreshing to see a post about SWA from a SWA employee that is critical of the company. Doesn't mean it is negative, or bashing the company. But to think that SWA can operate the same way that they have in the past without the fuel advantage isn't very realistic. I don't doubt that SWA has a good formula for efficiency and customer service. But it isn't going to be enough. One of the oddest things about being associated with SWA without actually wearing their ID, is the unicorns and rainbows attitude that is so prevalent there. Now it appears as though the rank and file are beginning to acknowledge in forums such as this that it isn't all peaches and ice cream. My needs are small with this merger, a little honesty goes a long way. And since the GO or GK isn't going to provide it, I'll gladly take it from the employees.

 

[vixin]

They have what was once a nearly perfect business concept that is now showing it's age as competitors are figuring out how to compete more effectively

Yeah they figured it out all right. It's called bankruptcy and not having to pay the debts and obligations you agreed to.

Hum, I'll tell you this is the first time I have been concerned at SWA . The more the GO and GK touch things the worse it seems to be getting. They bit off more then they can chew for sure. Lets hope they get it figure out for we are just a mere cog in the machine. Between screwing up this integration to running away from all competition it is a little unnerving. I also don't think the purchases are not over. We will have to see what happens.

 

[laker4284]

Yeah they figured it out all right. It's called bankruptcy and not having to pay the debts and obligations you agreed to.

Hum, I'll tell you this is the first time I have been concerned at SWA . The more the GO and GK touch things the worse it seems to be getting. They bit off more then they can chew for sure. Lets hope they get it figure out for we are just a mere cog in the machine. Between screwing up this integration to running away from all competition it is a little unnerving. I also don't think the purchases are not over. We will have to see what happens.

Are you sure the problem is Kelly?

With the legacy carriers stripping away chubby contracts and onerous debt they have dropped their costs significantly. Bankruptcy also gave them freedom to fix their fleet model and the mix of business-domestic and international-domestic. Mergers brought new connections and dynamics. That was some serious streamlining that was not needed (or done) at SWA (with the exception of AT).

Strategically the acquisition of Air Tran made sense. On the shorter term or tactical level melding AT into SWA is painful and expensive. Back when SWA bought and absorbed Morris it really stirred things up and cost a lot of money for two or three years before it paid off. But it DID pay off.

Lastly, SWA made a decision to forego fees in order to (hopefully) enlarge market share. That does not seem to have paid off. The company, however, still can initiate fees and rake in serious cash. They can do that at any time and Kelly has said it was something that they would look at.

There's lots of room for more revenue and the synergies from AT are not yet realised. I'd say Kelly has been moving the company into a new environment, something that takes time (and lots of changes).

Accordingly, Kelly cannot be fairly compared to the beloved Kelleher.

 

[Ops check good]

They should start allowing regional feed.

 

[vixin]

Hence the reason why I mentioned their bankruptcy.

 

[Whataburger]

They should start allowing regional feed.

Definetly what we need!!

 

[EngineThunder]

Check with DAL, they have the blueprint

 

[FlyinGuy]

All we have to do is let our costs get out of control and lose money for a decade or so, then we can file for BK and undercut the other guys. This industry is cyclical. Enjoy the ride.

 

[Kharma Police]

They should start allowing regional feed.

They already do, it's called AirTran.

 

[BR715]

If they started regional feed the IT department would take 3 years to come up with a program that would allow inter-twined ops. Then GK would be on the news line saying that the real benefits of the operation won't be realized for some time. SWA just moves to slow.

 

[Lear70]

They already do, it's called AirTran.

You mean the Caribbean region?

 

[ATRCAPT]

I think we're simply in a little over our heads right now. We bit off more than we could chew, and we're having to dig our way out. That's going to take some time.

I fly with a lot of guys who are pissed that we've strayed from our proven model. That's valid to a point. To paraphrase Herb: you either adapt or die. While it's a mess right now, I think the acquisition will pay benefits in the long run. As for Gary Kelly, I'm still giving him the benefit of the doubt. Let's face it, this is the single toughest time in airline history. As great as Herb was/is, he never had to run the company in this sort of environment. As far fortune 500 CEO's go, Gary doesn't make much. I think he was number 480 or something like that. The point is, he could make more money somewhere else yet he chooses to stay. I think this says a lot. I certainly don't agree with a lot of things he's doing right now, but I still support him. Personally I'd rather rid ourselves of CM and/or MVdV.

We totally blew the Hawaii gig. We sat on the sideline with our collective thumbs up our butts and now Alaska owns it. I think we should kiss the Aloha state goodbye and focus our efforts elsewhere.

I was initially a big proponent of the bags fly free thing, but it's now apparent it doesn't work. We held out as long as we could, but we simply can't afford to let that revenue go.

I am concerned at the amount of flights that are being cut. One of the big reasons we have been so popular with people is our frequency. People are willing to forgo the assigned seats and entertainment systems to be able to go when they want to. That is changing, and I think it's a mistake.

On the plus side, we do have a boatload of cash which allows us time to sort these growing pains out. But we need to make sure we do it.

I'm just a right seat biotch, albeit a fairly senior biotch, and this aint my first rodeo so take this for what it is.

Later.

 

[Ty Webb]

Excellent post. My assessment is pretty much the same.

 

[jonjuan]

The unintended consequence, however, of adding bag fees is losing marketshare.

 

[GIZMONC]

GK should have never signed the check to purchase FL until a complete reservations system was in place. Going on two years and still there is no codeshare inplace. The current CS2, (Old Braniff cowboy system) does not do the job. Flights to near international is not possible until a system is in place. Like of like buying a car with no ability to purchase gas.

 

[humveedriver]

GK should have never signed the check to purchase FL until a complete reservations system was in place. Going on two years and still there is no codeshare inplace. The current CS2, (Old Braniff cowboy system) does not do the job. Flights to near international is not possible until a system is in place. Like of like buying a car with no ability to purchase gas.

I asked Gary Kelley why they didn't opt for a new reservation system prior to SOC, at one of those pilot/management dinners. His response was "it wasn't a priority". Cop out answer IMO and one that he has used often with the Wall Street analysts. It really does fall in the epic fail category, obviously they were trying to saves money by adding more patches to the old system. They went through 3 IT directors by last count. They also could have negotiated the FA and pilot side letters for international too by SOC. Again not a priority. Which is fine by me, but we were never told what was the priority? And it was after the dinner that I pretty much stopped caring, because I left that room completely uninspired.