Southwest Airlines Financial Analysis

Southwest Airlines has a strong financial history encompassing its existence and has posted 42 consecutive years of profit. This streak of profitability has not been challenged by a US air carrier in the history of the US airline industry (Southwest Airlines, 2015a). Southwest Airlines last consecutive five years shows them to be in a modest growth position as the company realigned itself with the acquisition of AirTran.

Over the last five years (2010 – 2014) Southwest Airlines has averaged a net income of $590 million. Operating revenue has been on a positive increase since 2011, but Southwest Airlines did not see year over year increase in net income over the five-year period due to the acquisition of AirTran Airlines in 2011. In Figure

This figure illustrates revenues and expenses on the left side of the chart with the net income on the right side. Adapted from Southwest Airlines. (2015, March 15). Southwest Airlines Co. 2014 Annual Report to Shareholders. Retrieved from:

The average year over year Load Factor growth from 2010 to 2014 was only .8%. This mainly can be contributed to the acquisition of AirTran into the Southwest Airlines fleet. For 2012 and 2013 Southwest was integrating the existing AirTran Boeing 737 into Southwest livery, which required down time (Trefis Team, 2014). Due to this, the Load Factors were in the negative percentile for both years. In 2014 as the integration of AirTran came to an end, Southwest saw their load factors increase to 2.4% (Southwest Airlines, 2015b). Figure 2, Southwest Operational Figures 2010 through 2014, shows that for years 2010 through 2014 Southwest had increases in both Revenue Passenger Miles and Available Seat Miles but the Load Factor remained relatively flat across all