AirTran – S.A. Quality Avails Book Value: Capital Gains on Long Term Equities

Published on: Aug. 5, 2014 4:28 PM ET

Summary:

LUV’s history and successful growth.
2011 M&A with AirTran and tailwinds from standardized inventory management.
Crisis management, successful YOY financials, and current status/expansion.

About the Company & Its Growth Strategy

Southwest Airlines Co. (NYSE: LUV) operates commercial passenger airlines that provide scheduled point to point air transportation services in the United States (Southwest Airlines 2014). The company was founded in 1967 and is headquartered in Dallas, Texas.

Attempting to keep operating expenses at a minimum, the corporation initially had slow growth. Southwest flew mainly into second tier airports, such as Chicago Midway, in order to avoid high landing fees. Since 1978, the company’s strategically oriented frugalness has demonstrated competency, surviving through 180 declared bankruptcies within the airline industry (Boguslaski, Ito and Lee 2004). The reduction in operating expenses were compounded by savings of nearly $2 billion from fuel hedges (Carter, Rogers and Simkins 2001). During the corporation’s maturing phase, it expanded its market in 37 larger airports such as Hartsfield Jackson Intl. in Atlanta, the world’s busiest airport according to passenger traffic.

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