Southwestern Case

In an industry noted for its vulnerability to economic cycles and feast-or famine profitability, Southwest Airlines has defied the odds. During a decade of multibillion dollar losses and massive layoffs in the airline industry, Southwest Airlines has been consistently profitable.

The corporate culture at Southwest Airlines is such that, employees are held in high regard. This translates directly into excellent customer service ratings, improved customer retention and ultimately ever-increasing profitability.

Management at Southwest insists on fiscal conservatism, strong balance sheet, comparatively low levels of debt and zealous attention to bottom line profitability.

The income statement of Southwest Airlines was presented in a five-year financial and operating performance summary, which highlights fiscal years 2003 to 2007. And so, we have calculated five key financial ratios which evaluate the scope of Southwest Airlines' financial performance.

Undeniably, Southwest Airlines' financial performance demonstrates a degree of resilience and stability that is unparalleled by any other airline. From fiscal year 2003 through fiscal year 2007, Southwest Airlines' operating profit margin and net profit margin grew 2 percentage points and 1 percentage point respectively, at a time when some major U.S carriers saw their earnings plummet. Investors, employees and other stake holders of Southwest Airlines