A Comparison Of American Airlines And Delta Airlines

(EBIT) Margin went down from 18.0% to 15.9% and the EBIT to total assets went down from 15.8% to 13.4% (Southwest Airlines Co., n.d.). Both American Airlines and Delta Air Lines increased their revenue from 2016 to 2017. American Airline’s Sales/Revenue went from 40.18B TO 42.21B (American Airlines Inc., n.d.). Delta’s Sales/Revenue was 39.6B in 2016 and 41.24B in 2017 (Delta Air Lines Inc., n.d.). It is understandable that these two companies have higher incomes than Southwest due to the size and extensive locations of the company. However, Southwest Airlines Co. has a higher price. Southwest stock price currently is $57.99 while American’s is $53.50 and Delta’s is $53.55.

The major problems going forward for Southwest are fuel hedging, planes

This strategy help the company’s operations in the past, but is now resulting in loss. According Levine-Weinberg, Southwest revamped its fuel hedging strategy in 2017 to prevent a repeat of its 2015-17 hedging losses (Levine-Weinberg, 2018). However, it is currently paying the send largest oil price in the market and it could continue to do it in the rest of the year. This will increase the fuel expenses and continue to decrease the net profit. A more extensive research of the market needs to be done to determine is a smaller percentage of the fuel should be hedged or stop hedging like American Airlines, Delta, and recently

Besides offering low fares, great customer service and flight experience, the company does not charge for first and second checked bags. Also, the only major U.S. airline that does not charge a fee on any of its fares for a Customer change in flight reservations and unlike many of its competitors, Southwest does not impose additional fees for items such as seat selection, snacks, curb-side check-in, and telephone reservations. In addition, Southwest allows each ticketed Customer to check one stroller and one car seat free of charge, in addition to the two free checked bags (Southwest Airlines Co, 2017). These are advantages that differentiate the airline from its competitors and the Southwest is already investing in marketing effort to highlight the benefits. These initiatives should continue with the addition of unique airline services. Last year Southwest made $358 million by selling its EarlyBird Check-In (Murphy, 2018). This does not represent a big percentage of the total revenue of the company, but it is added income for a service that is electronic and it not incur additional expenses to the company to offer it. Other services like this one can be offered to increase revenue at low or no