Southwest Airlines 
Exam Content

You have been told the HR Director is pleased with the work you have completed for the organization and would like to take your contribution to the next level. She would like you to review several strategic reports on the organization and provide feedback on how you think Southwest HR should move forward.
Note: Double space your information: single spaced papers will not be accepted.
Review the recommended sources in addition to your own research.
Compile a strategy recommendation to the HR Director to be used for company-wide decisions. Include the following information in your report:

An executive summary of the HR strategy project
An analysis of current strategies and issues
Identify the type of strategy Southwest Airlines is following.
Identify 3 HRM implications for Southwest Airlines.
Develop and justify business strategies for each of the 3 HRM implications.
Determine an HR strategy.
A Progressive Digital Media business
COMPANY PROFILE
Southwest Airlines Co
REFERENCE CODE: DEFBDE99-9B78-4A63-BE9C-7EA7568D476E
PUBLICATION DATE: 20 Apr 2022
www.marketline.com
COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED
Southwest Airlines Co
TABLE OF CONTENTS
TABLE OF CONTENTS
Company Overview …………………………………………………………………………………………..3
Key Facts …………………………………………………………………………………………………………. 3
SWOT Analysis …………………………………………………………………………………………………4
Southwest Airlines Co
© MarketLine
Page 2
Southwest Airlines Co
Company Overview
Company Overview
COMPANY OVERVIEW
Southwest Airlines Co (Southwest Airlines) is a provider of passenger airline services. The company
provides point-to-point flight services that offer direct nonstop routing as compared to hub-and-spoke
service. It also offers high-frequency short-haul routes supported with the long-haul nonstop service
between markets such as Dallas Love Field and Houston Hobby, Denver Chicago Midway, Los Angeles
International and Las Vegas, Phoenix and Denver, Los Angeles and Nashville, Los Angeles and
Baltimore, and San Diego and Baltimore in the US. It also offers various ancillary services such as
upgraded boarding, EarlyBird Check-In, and transportation of pets and unaccompanied minors.
Southwest Airlines is headquartered in Dallas, Texas, the US.
The company reported revenues of (US Dollars) US$15,790 million for the fiscal year ended December
2021 (FY2021), an increase of 74.5% over FY2020. The operating profit of the company was US$1,693
million in FY2021, compared to an operating loss of US$3,816 million in FY2020. The net profit of the
company was US$977 million in FY2021, compared to a net loss of US$3,074 million in FY2020.
Key Facts
KEY FACTS
Head Office
Southwest Airlines Co
2702 Love Field Dr
Po Box 36611,
Dallas
Texas
Dallas
Texas
USA
Phone
1 214 7924000
Fax
Web Address
www.southwest.com
Revenue / turnover (USD Mn)
15,790.0
Financial Year End
December
Employees
55,100
New York Stock Exchange Ticker LUV
Southwest Airlines Co
© MarketLine
Page 3
Southwest Airlines Co
SWOT Analysis
SWOT Analysis
SWOT ANALYSIS
Southwest Airlines Co (Southwest Airlines) is a provider of passenger airline services. Strong liquidity
position, fleet network and business expansion are the company’s key strengths, even as operating
performance remains a cause for concern. Growth prospects for aviation industry, positive outlook for US
T&T industry and growth initiatives could provide new opportunities to the company. However,
fluctuations in fuel prices, increasing manpower costs in US, coronavirus (COVID-19) and stringent
government regulations could affect the company’s performance.
Strength
Weakness
Fleet Network
Liquidity Position
Business Expansion
Operating Performance
Opportunity
Threat
Positive Outlook for US T&T Industry
Growth Prospects: Aviation Industry
Growth Initiatives
Coronavirus (COVID-19)
Fluctuations in Fuel Prices
Increasing Manpower Costs in US
Stringent Government Regulations
Strength
Fleet Network
Southwest Airlines has a strong fleet network. Based on the US Department of Transportation’s most
recent data, the company is the US’s largest carrier in terms of originating domestic passengers boarded.
As of December 31, 2020, the company had 718 Boeing 737 aircraft of which 70 were finance leased and
67 was under operations. Out of 737 aircraft 470 are Boeing 737-700; 207 are Boeing 737-800; and 41
are Boeing 737 MAX 8. The company also has plans to add 380 aircrafts by 2026 comprising 219 MAX 8
Firm aircrafts, 115 Max 8 aircrafts and 30 Max 7 Firm aircrafts. It served 107 destinations in 40 states, the
District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries: Mexico,
Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and
Turks and Caicos.
Liquidity Position
Adequate cash reserves and high liquidity place the company at an advantage when it attempts to fund
any potential mergers and acquisitions, and expansions. Southwest Airlines’ current ratio was 2.0 at the
end of FY2020, as compared to 0.7 at the end of FY2019. A higher current ratio than the previous year
indicates that the company has relatively high liquidity. At the end of FY2020, the company had total
current assets of US$15,173 million, as compared to US$5,974 million at the end of FY2019, with cash
Southwest Airlines Co
© MarketLine
Page 4
Southwest Airlines Co
SWOT Analysis
and equivalents worth US$11,063 million. Its total current liabilities stood at US$7,506 million at the end
of FY2020, which shows a decline of 16.2% over that in the previous year. Its current portfolio of longterm debt or capital leases also fell from US$819 million in FY2019 to US$220 million in FY2020.
Business Expansion
Southwest Airlines has strengthened its business operations by expanding the existing businesses that
complement its operations. An inorganic growth strategy enhances the company’s depth of expertise,
broadens its product and service portfolio, and increases its shareholder value. The company launched
six new destinations in 2020, which are Hilo International Airport, Cozumel International Airport, Miami
International Airport, Palm Spring International Airport, Montrose Regional Airport and Yampa Valley
Regional Airport. The company has plans to add other new destinations in 2021, which are Chicago
O’Hare International Airport, Sarasota Bradenton International Airport, Colorado Springs Municipal
Airport, Savannah/Hilton Head International Airport, Houston’s George Bush Intercontinental Airport,
Santa Barbara Airport, Fresno Yosemite International Airport and Jackson-Medgar Wiley Evers
International Airport in Mississippi.
Weakness
Operating Performance
Poor operating performance may reduce investor confidence and impact its ability to pursue growth
plans. Southwest Airlines recorded poor operating performance in FY2020 during which it recorded
revenues of US$9,048 million, with an annual decline of 63.1%, representative of a negative CAGR of
18.3% during 2016-2020. In FY2020, the company reported an operating loss of US$3,816 million, as
compared to operating income of US$2,957 million in FY2019. This was caused by 63.1% decline in
passenger revenue to US$7,665 million in FY2020, as compared to US$20,776 million in FY2019.
Decline in passenger revenue was due to reductions in capacity and a decline in passenger demand and
bookings during 2020. Its freight revenue was declined by 6.4% to US$161 million in FY2020, as
compared to US$172 million in FY2019 due to lower trips flown and disruptions in supply chain.
Moreover, the company recorded 17.4% decline in other revenue to US$1,222 million in FY2020, as
compared to US$1,480 million in FY2019 due to decrease in income from business partners. The
company’s operating margin was negative 42.2% in FY2020, as compared to 13.2% in FY2019. The
company also reported a negative ROE of 34.6%, as compared to 23.4% in FY2019.
Opportunity
Positive Outlook for US T&T Industry
The company is likely to benefit from the positive outlook for the US Travel and Tourism (T&T) industry. In
spite of being affected by the COVID-19 pandemic, the Travel and Tourism (T&T) sector is optimistic
about growth as vaccine distribution across the world gains momentum and economic activities return to
pre-Covid levels. According to the World Travel & Tourism Council (WT&TC), in 2028, the direct
contribution of the US T&T industry to the country’s GDP is expected to reach US$673.9 billion, while the
Southwest Airlines Co
© MarketLine
Page 5
Southwest Airlines Co
SWOT Analysis
industry’s contribution to the US economy is expected to reach US$1,954.1 billion. Visitor exports are
expected to reach US$291.7 billion in 2028. The increase in investments to US$246.2 billion in 2028 is
likely to spur growth in the US T&T industry.
Growth Prospects: Aviation Industry
Southwest Airlines could benefit from the positive outlook for the global aviation industry, which could
drive the demand for its services in the aviation market space. According to the Airports Council
International (ACI) report, the global passenger volume is projected to reach 20.9 billion by 2040, with an
annual growth of 4.1%. China is forecasted to be the largest air passenger market with 4.0 billion
passengers, a 19% share of the global air passenger traffic. The US and India are expected to be second
and third largest air passenger traffic markets with 3.1 billion and 1.3 billion passengers, respectively.
Emerging economies including Indonesia, Turkey and Vietnam are expected to play significant roles in
the global passenger traffic market. The global air cargo volume is also expected to reach 203.4 million
tonnes by 2040. It is also expected that over 20% of all air cargo could be handled in the US alone by
2040, while China and the UAE could be considered as the second and third largest air cargo markets.
The US, China and India are estimated to be the primary markets for global aircraft movements by 2040,
representing 21%, 16% and 4% of aircraft movements, respectively.
Growth Initiatives
Southwest Airlines taking various initiatives to drive growth. The initiatives are expected to strengthen the
company’s operations and increase its returns. In March 2021, the company announced to buy advanced
CFM International LEAP-1B engines to power 100 Boeing 737 MAX 7 aircraft. In November 2020, the
company launched a new nonstop flight from the Memphis International Airport to Phoneix, Arizona. In
October 2020, the company and Amadeus announced to expand their partnership to offer for business
travel through the Amadeus Travel Platform. In October 2020, the company launched its nonstop service
from Phoenix to Cabo San Lucas and Puerto Vallarta. In October 2020, the company announced the
expansion of its services in Chicago and Houston at Midway International Airport and William P. Hobby
Airport. In May 2020, the company signed a purchase-and-leaseback agreement with BOC Aviation
Limited for ten Boeing 737 MAX 8 aircraft equipped with CFM LEAP-1B engines. In January 2020, the
company opened its new maintenance facility at William P. Hobby International Airport in Houston, Texas.
Threat
Coronavirus (COVID-19)
The impact of Covid-19 on airline industry is expected to be very severe due to the curtailment of
international and domestic air travel in 2020. Country-specific regulations on international flights, longdistance travel bans, and cancellation of trips affected the global airline industry and resulted in huge
losses to the aviation industry. Governments in various countries imposed several restrictions to contain
the spread of the virus such as US-Canada border closure for non-essential traffic, EU’s 30-day ban on
non-essential travel to about 26 countries in Europe from the rest of the world, the US’s 30-day ban on
Schengen travelers, and lockdown in Italy, the UK, Australia, India and other countries. As a result of
these travel restrictions, the global air traffic declined in the short-term. According to International Air
Southwest Airlines Co
© MarketLine
Page 6
Southwest Airlines Co
SWOT Analysis
Transport Association’s (IATA) projection on March 24, 2020, the global airline industry is predicted to
report a passenger revenue loss of US$252 billion in 2020. Asia Pacific, Europe, North America, the
Middle East, Latin America, and Africa are expected to report passenger revenue loss of US$88 billion,
US$76 billion, US$50 billion, US$19 billion, US$15 billion and US$4 billion, respectively, in 2020.
Fluctuations in Fuel Prices
The company’s business is highly dependent on the price and availability of jet fuel, and its performance
could be adversely affected by high volatility in fuel costs, increased fuel prices and disruptions in the
supply of jet fuel. The fuel market is volatile and changes according to market, political and economic
movements. Therefore, a modest decline or increase in prices could have a significant impact on the
company’s business operations. Several factors are responsible for such changes including domestic and
foreign supply of oil, global economic conditions, price and availability of alternative fuels, governmental
regulations, weather conditions and technological advances, among others. According to the International
Air Transport Association, jet fuel price was US$182.85 per barrel as of April 9, 2020, as compared to
US$182.9 as of April 01, 2020, which increased 0.5% one week ago. Such increase in jet fuel price could
affect the company’s overall profitability.
Increasing Manpower Costs in US
Increasing manpower costs could increase the company’s operating costs and hamper its profits. The
tight labor markets, government-mandated increases in minimum wages and a higher proportion of fulltime employees are increasing labor costs. Effective January 2021, 21 states in the US increased their
minimum wages. Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont increased their
hourly minimum wage based on the cost of living to US$10.34, US$8.65, US$10, US$8.8, US$9.45 and
US$11.7, respectively. Arizona, Arkansas, California, Colorado, Illinois, Maine, Maryland and
Massachusetts increased their hourly minimum wages to US$12.15, US$11, US$13, US$12.32, US$11,
US$12.15, US$11.75 and US$13.5, respectively. Whereas states such as Michigan, Missouri, New
Jersey, New Mexico, New York, and Washington increased their hourly minimum wages due to previously
approved legislation to US$9.65, US$10.3, US$12, US$10.5, US$12.5 and $13.69, respectively.
Stringent Government Regulations
Airlines are subject to extensive regulatory and legal compliance requirements that result in significant
expenditures. For instance, the Federal Aviation Authority (FAA) is an authority body, which regulates all
safety issues in civil aviation operations. FAA’s safety jurisdiction includes aircraft maintenance and
operations such as equipment, ground facilities, dispatch, communications, flight training personnel, and
other matters affecting air safety. These will increase the aircraft operations cost significantly. The
company expects to continue incur expenses to fulfill the FAA’s regulations. These authorization laws,
regulations, taxes and airport rates and charges have also been imposed from time to time that
significantly increase operating expenses or reduce profit margins. As a result, complying with such laws,
regulations and actions increases the operating costs of Southwest Airlines which could have a significant
effect on its profitability and margins.
Southwest Airlines Co
© MarketLine
Page 7
Copyright of Southwest Airlines Co. SWOT Analysis is the property of MarketLine, a
Progressive Digital Media business and its content may not be copied or emailed to multiple
sites or posted to a listserv without the copyright holder’s express written permission.
However, users may print, download, or email articles for individual use.
A Progressive Digital Media business
COMPANY PROFILE
Southwest Airlines Co
REFERENCE CODE: DEFBDE99-9B78-4A63-BE9C-7EA7568D476E
PUBLICATION DATE: 10 Jun 2022
www.marketline.com
COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED
Southwest Airlines Co
TABLE OF CONTENTS
TABLE OF CONTENTS
Company Overview …………………………………………………………………………………………..3
Key Facts …………………………………………………………………………………………………………. 3
SWOT Analysis …………………………………………………………………………………………………4
Southwest Airlines Co
© MarketLine
Page 2
Southwest Airlines Co
Company Overview
Company Overview
COMPANY OVERVIEW
Southwest Airlines Co (Southwest Airlines) is a provider of passenger airline services. The company
provides point-to-point flight services that offer direct nonstop routing as compared to hub-and-spoke
service. It also offers high-frequency short-haul routes supported with the long-haul nonstop service
between markets such as Dallas Love Field and Houston Hobby, Denver Chicago Midway, Los Angeles
International and Las Vegas, Phoenix and Denver, Los Angeles and Nashville, Los Angeles and
Baltimore, and San Diego and Baltimore in the US. It also offers various ancillary services such as
upgraded boarding, EarlyBird Check-In, and transportation of pets and unaccompanied minors.
Southwest Airlines is headquartered in Dallas, Texas, the US.
The company reported revenues of (US Dollars) US$15,790 million for the fiscal year ended December
2021 (FY2021), an increase of 74.5% over FY2020. The operating profit of the company was US$1,693
million in FY2021, compared to an operating loss of US$3,816 million in FY2020. The net profit of the
company was US$977 million in FY2021, compared to a net loss of US$3,074 million in FY2020.
The company reported revenues of US$4,694 million for the first quarter ended March 2022, a decrease
of 7.1% over the previous quarter.
Key Facts
KEY FACTS
Head Office
Southwest Airlines Co
2702 Love Field Dr
Po Box 36611
Dallas
Texas
Dallas
Texas
USA
Phone
1 214 7924000
Fax
Web Address
www.southwest.com
Revenue / turnover (USD Mn)
15,790.0
Financial Year End
December
Employees
58,865
New York Stock Exchange Ticker LUV
Southwest Airlines Co
© MarketLine
Page 3
Southwest Airlines Co
SWOT Analysis
SWOT Analysis
SWOT ANALYSIS
Southwest Airlines Co (Southwest Airlines) is a provider of passenger airline services. Operational
performance, fleet network and business expansion are the company’s key strengths, even as increasing
trade receivables remains a cause for concern. Growth prospects for the aviation industry, a positive
outlook for the US T&T industry and growth initiatives could provide new opportunities to the company.
However, fluctuations in fuel prices, increasing manpower costs in the US, coronavirus (COVID-19) and
stringent government regulations could affect the company’s performance.
Strength
Weakness
Fleet Network
Operational Performance
Business Expansion
Increasing Trade Receivables
Opportunity
Threat
Positive Outlook for US T&T Industry
Growth Prospects: Aviation Industry
Growth Initiatives
Coronavirus (COVID-19)
Fluctuations in Fuel Prices
Increasing Manpower Costs in US
Stringent Government Regulations
Strength
Fleet Network
Southwest Airlines has a strong fleet network. Based on the US Department of Transportation’s most
recent data, the company is the US’s largest carrier in terms of originating domestic passengers boarded.
As of December 31, 2021, the company had 728 Boeing 737 aircraft of which 70 were finance leased and
67 were under operation. Out of 737 aircraft, 452 are Boeing 737-700; 207 are Boeing 737-800, and 69
are Boeing 737 MAX 8. The company also has plans to add 380 aircraft by 2026 comprising 219 MAX 8
Firm aircraft, 115 Max 8 aircraft and 30 Max 7 Firm aircraft. It served 107 destinations in 40 states, the
District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries: Mexico,
Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and
Turks and Caicos.
Operational Performance
Operational performance helps in enhancing investor confidence and the company’s ability to pursue
growth plans. Southwest Airlines recorded a strong operating performance in FY2021 during which it
recorded revenues of US$15,790 million, with an annual growth of 42.7%. The increase was primarily a
result of improvement in revenue of its Passenger, Freight and Other segments. The company reported
an operating income of US$1,693 million in FY2021 as compared to an operating loss of US$3,816
Southwest Airlines Co
© MarketLine
Page 4
Southwest Airlines Co
SWOT Analysis
million in FY2020. The company’s operating margin was 10.7% in FY2021, which was higher than the
operating margin of -42.2% in FY2020. Its return on equity (ROE) was 9.4% in FY2021, significantly
higher than ROEs of -34.6% in FY2020.
Business Expansion
Southwest Airlines has strengthened its business operations by expanding the existing businesses that
complement its operations. An inorganic growth strategy enhances the company’s depth of expertise,
broadens its product and service portfolio, and increases its shareholder value. The company launched
six new destinations, which are Hilo International Airport, Cozumel International Airport, Miami
International Airport, Palm Spring International Airport, Montrose Regional Airport and Yampa Valley
Regional Airport. The company has plans to add other new destinations, which are Chicago O’Hare
International Airport, Sarasota Bradenton International Airport, Colorado Springs Municipal Airport,
Savannah/Hilton Head International Airport, Houston’s George Bush Intercontinental Airport, Santa
Barbara Airport, Fresno Yosemite International Airport and Jackson-Medgar Wiley Evers International
Airport in Mississippi.
Weakness
Increasing Trade Receivables
Southwest Airlines has reported an increasing trend in its trade receivables for the past years. Increasing
trade receivables could adversely affect the company’s cash flows. The company’s trade receivables
stood at US$490 million in FY2021, and US$320 million in FY2020, reflecting an increase of 34.6% over
the previous year. The company maintains a substantial amount of current assets in the form of
receivables. In FY2021, the company’s trade receivables accounted for 2.7% of its current assets.
Opportunity
Positive Outlook for US T&T Industry
The company is likely to benefit from the positive outlook for the US Travel and Tourism (T&T) industry. In
spite of being affected by the COVID-19 pandemic, the Travel and Tourism (T&T) sector is optimistic
about growth as vaccine distribution across the world gains momentum and economic activities return to
pre-Covid levels. According to the World Travel & Tourism Council (WT&TC), in 2028, the direct
contribution of the US T&T industry to the country’s GDP is expected to reach US$673.9 billion, while the
industry’s contribution to the US economy is expected to reach US$1,954.1 billion. Visitor exports are
expected to reach US$291.7 billion in 2028. The increase in investments to US$246.2 billion in 2028 is
likely to spur growth in the US T&T industry.
Growth Prospects: Aviation Industry
Southwest Airlines could benefit from the positive outlook for the global aviation industry, which could
drive the demand for its services in the aviation market space. According to the Airports Council
Southwest Airlines Co
© MarketLine
Page 5
Southwest Airlines Co
SWOT Analysis
International (ACI) report, the global passenger volume is projected to reach 20.9 billion by 2040, with an
annual growth of 4.1%. China is forecasted to be the largest air passenger market with 4.0 billion
passengers, a 19% share of the global air passenger traffic. The US and India are expected to be second
and third largest air passenger traffic markets with 3.1 billion and 1.3 billion passengers, respectively.
Emerging economies including Indonesia, Turkey and Vietnam are expected to play significant roles in
the global passenger traffic market. The global air cargo volume is also expected to reach 203.4 million
tonnes by 2040. It is also expected that over 20% of all air cargo could be handled in the US alone by
2040, while China and the UAE could be considered as the second and third largest air cargo markets.
The US, China and India are estimated to be the primary markets for global aircraft movements by 2040,
representing 21%, 16% and 4% of aircraft movements, respectively.
Growth Initiatives
Southwest Airlines taking various initiatives to drive growth. The initiatives are expected to strengthen the
company’s operations and increase its returns. In June 2022, the company announced an investment into
SAFFiRE Renewables LLC to develop and produce scalable, sustainable aviation fuel (SAF). In May
2022, the company launched a new fourth fare product in Wanna Get Away Plus providing travellers with
more flexibility and additional perks. In April 2022, the company launched new routes in San Diego and
San Jose Gain Big. In March 2022, the company announced the opening of a new Technical Operations
complex at Denver International Airport. In February 2022, the company and Travelport bring EarlyBird
Check-In to Travelport. In February 2022, the company collaborated with Luck Reunion to become the
Official Airline of Luck Reunion. In January 2022, the company launched interest-free payment
instalments to Hawaii with Buy Now Pay Later Leader, Uplift. In the same month, the company and iAero
Thrust signed an MRO services agreement to provide CFM56-7 engine hospital repair, on-wing support,
and test services.
Threat
Coronavirus (COVID-19)
The coronavirus (COVID-19) pandemic affected global economy severely. It resulted in huge human loss,
and protection measures such as isolation, lockdown, quarantine, and social distancing to contain the
spread of the virus brought economic activity to a standstill. It affected international economic and trade
functions, ranging from tourism and hospitality, medical supplies and other global value chains, consumer
electronics, and financial markets to energy, transportation, food, and various social activities. If the
pandemic continues to ravage the world, it might have a negative impact on the global economy.
Fluctuations in Fuel Prices
The company’s business is highly dependent on the price and availability of aircraft fuel, and its
performance could be adversely affected by high volatility in fuel costs, increased fuel prices and
disruptions in the supply of aircraft fuel. The fuel market is volatile and changes according to market,
political and economic movements. Therefore, a modest decline or increase in prices could have a
significant impact on the company’s business operations. Several factors are responsible for such
changes including domestic and foreign supply of oil, global economic conditions, price and availability of
Southwest Airlines Co
© MarketLine
Page 6
Southwest Airlines Co
SWOT Analysis
alternative fuels, governmental regulations, weather conditions and technological advances, among
others. Volatile prices could affect the company’s overall profitability.
Increasing Manpower Costs in US
Increasing manpower costs could increase the company’s operating costs and hamper its profits. The
tight labor markets, government-mandated increases in minimum wages and a higher proportion of fulltime employees are increasing labor costs. Effective January 2021, 21 states in the US increased their
minimum wages. Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont increased their
hourly minimum wage based on the cost of living to US$10.34, US$8.65, US$10, US$8.8, US$9.45 and
US$11.7, respectively. Arizona, Arkansas, California, Colorado, Illinois, Maine, Maryland and
Massachusetts increased their hourly minimum wages to US$12.15, US$11, US$13, US$12.32, US$11,
US$12.15, US$11.75 and US$13.5, respectively. Whereas states such as Michigan, Missouri, New
Jersey, New Mexico, New York, and Washington increased their hourly minimum wages due to previously
approved legislation to US$9.65, US$10.3, US$12, US$10.5, US$12.5 and $13.69, respectively.
Stringent Government Regulations
Airlines are subject to extensive regulatory and legal compliance requirements that result in significant
expenditures. For instance, the Federal Aviation Authority (FAA) is an authority body, which regulates all
safety issues in civil aviation operations. FAA’s safety jurisdiction includes aircraft maintenance and
operations such as equipment, ground facilities, dispatch, communications, flight training personnel, and
other matters affecting air safety. These will increase the aircraft operations cost significantly. The
company expects to continue incur expenses to fulfill the FAA’s regulations. These authorization laws,
regulations, taxes and airport rates and charges have also been imposed from time to time that
significantly increase operating expenses or reduce profit margins. As a result, complying with such laws,
regulations and actions increases the operating costs of Southwest Airlines which could have a significant
effect on its profitability and margins.
Southwest Airlines Co
© MarketLine
Page 7
Copyright of Southwest Airlines Co. SWOT Analysis is the property of MarketLine, a
Progressive Digital Media business and its content may not be copied or emailed to multiple
sites or posted to a listserv without the copyright holder’s express written permission.
However, users may print, download, or email articles for individual use.

Purchase answer to see full
attachment