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A Comparison Of American Airlines And Delta Airlines

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(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 …show more content…

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 …show more content…

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

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Southwest Airlines is known for being a cheaper option, and they provide flexible travel plans as their tickets are refundable. Since 2010, the firm has established itself a major player in the market because of their acquisition of AirTran, and as a result, the industry has completely transformed

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a major success of the business was the bankruptcy of delta air lines led to cost-cutting, primarily labor cost cutting, and enabled the final stages of post-deregulation consolidation to play out.largest fleet size in the world. It is the second highest revenue grossing airline in

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When a smaller airline infringes on a major airline’s turf in a major market, attempting to undercut them on price, the FSC often retaliates by lowering price whilst maintaining their premium offerings and perks. This creates downward pressure on average fares in that region, which is good for the consumer and leads to an increase in overall travel volume on those routes (See Figure 4 below) . Spirit is no stranger to this part of the market, and recently found itself in a pricing war in the Dallas-Fort Worth market (American Airline’s largest hub). Spirit attempted to move in and undercut American Airlines, to which American responded by slashing their prices in what Spirit’s management called a “chainsaw approach.” Moreover, not only did American retaliate in Dallas-Fort Worth, they also cut prices in all routes where Spirit overlapped, particularly in Chicago O’Hare Airport, American's third-largest

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The current stock price of Southwest Airlines is $42.33 Its P/E ratio is 11.23 Yes, Southwest Airlines does pay a dividend Its CEO is Gary Kelly The latest earnings per share were $3.51 (12 months ending Mar 31, 2016)

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In order for Spirit Airlines to capitalize on their strengths is to continuing to grow in the market of aircraft. Expanding in the industry will continue to increase their revenue. Also, Spirit airlines need to think of which amenities are most important to the majority of their clients and offer those amenities free of cost. Yes, they would have to increase the base price slightly in order to be able to offer these amenities free of cost, but it is possible that Spirit airlines can still be cheaper than their rivals. Spirit airlines offers their customer’s amenities only if the customer is willing to pay for them.

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Therefore, Southwest employees had the distinction of earning the highest salaries on average in the industry. Subsequently, the Southwest Warrior Spirit is reciprocated in the value of hard work, as workers exceeded management expectations when the pilots clock in twice the number of hours in flying time as compared to the industry standard, and flight attendants fly 150 hours monthly, as compared to the industry average of 80 hours (Rao,

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To cut down on a customers wait times, a customer can print their boarding pass at home with the use of the Internet. Also, Delta has installed kiosks that allow a customer to check into their flight by themselves. A customer can make their reservations over the Internet using websites such as Orbitz, or Traveocity. The customer can even pick the seat in which they want to sit in. All this technology is to streamline the process of checking in for the flight and reduces the customer’s frustration.

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While there was much to gain from a market share perspective, there was also risk in transforming a no-frills travel experience designed for the common traveler with little to no experience as a competitive contender with the traditional carriers. The legacy carriers had grown larger and more efficient through the turmoil of bankruptcies, restructuring, and mergers of the past with lower cost airfare and well-established networks and performance in the business travel market. The economic risk was made clearly evident in May, 2015, when Southwest CEO announced he was raising the goal for additional capacity in the form of available sear miles from 7% to between 7% and 8% for the year. American Airlines immediately offered to match any fare to counter LCCs attempt to gain their customers. This bantering between the two rivals resulted in the collapse of stock prices by 12% erasing roughly $10 billion in market value for Southwest, American, and United (Tully,

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Real time analysis of Southwest Airline’s strategic perspective can be summed up in a name, Herbert Kelleher. Though not currently the CEO, from its beginning in 1971 to stepping down in 2008, Herbert Kelleher started an organization that defied odds and has continued to compete with a low-cost strategy in one of the most expensive markets, the airline business. Southwest’s company website has a page dedicated to Kelleher and the awards and accolades he and Southwest achieved during his tenure and the page is overflowing with awards. One of Southwest’s most prestigious notorieties was “the Fall 2002 edition of Money magazine revealed that, during the 30-year period 1972-2002, Southwest produced the highest return to shareholders of any company

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Their mission statement is “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” (taken from Southwest Airlines site). With a market capitalisation of 32.43B and 53,536 employees, Southwest Airlines is a big player in US air travel. Delta Airlines

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Their most important strategy is expanding global network because they want to strengthen their presence in major and developing markets around the world in effort to increase and diversity their network into high revenues and high growth market (Delta Air Lines, Inc). The growth of their global presence will enable customers to connect more places and enjoy a consistence high-quality travel experience. Delta Air Line, Inc. has two major segments such as airline and refinery. It operates throughout the US and the world, and it allows them to benefit from an integrated revenue pricing and route network. According to Financial Times, the consensus forecast among seventeen polled investment analysts advise Delta Air Lines, Inc. investor to purchase equity in the company as of February 25, 2017, (Financial Times).

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Also, it had found a market that its competitors were not really serving in the short haul market. Today, Southwest does have more competition, but I believe it has the ability to stay on the top. 4. What did you learn and how do you plan to apply these learnings in the

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Delta airline was expanding its business into low-cost airline segment by launching new independent subsidiary by the name of Song. Song’s primary business model was to target women and the segment of business class people. In effect to reduce the cost, Song management decided to fly high load factor on the drag of 900 miles. Moreover, the company increased the number of

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"In recent years the falling price in fuel has meant a rise in profits for airlines. International Airlines Group, the owner of British Airways, reported a 65 percent jump in annual profits after a bumper year of strong demand and low fuel costs" (Powley, T. (2016). This reduction in fuel price has benefited airlines profit margins because airline fares haven't been reduced, this has led to customers becoming disgruntled as they are still being charged a high price when it's costing the airline less to fly their planes. "The reality is airlines don't price their flights based on their cost. In the short term, they price it based on demand.

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