Sw Airlines

Southwest Airlines - Company Motivation Profile

Sam George Daher,

BUS 6351 Business and Society

Professor Fernando Garza

Wednesday, May 2nd, 2006

Abstract

Southwest Airlines is one of the most desired employers. The company's unique corporate culture has been established since Southwest Airlines first started. In addition, Southwest Airline's mission statement, organizational structure, and decision-making strategies are also important to Southwest's culture. Southwest Airline uses many motivational strategies to keep its employees motivated. From the benefits, free airfare, profit sharing, to the job design and leadership styles, Southwest is a company almost anyone would be willing to work for.

Southwest Airlines - Company Motivation Profile

There are many successful, leading edge corporations in the world. Some of them are Federal Express, Microsoft, and the Disney Corporation; however, none of these corporations compare to Southwest Airlines. Southwest Airlines is one of the most desired employers. "In 2003 alone, Southwest received more than 202,000 resumes of which only 908 were selected for employment" (Ivie, n.d., para. 7). One of the reasons that Southwest Airlines attracts so many potential employees is because of the benefits it offers. The benefits are not just monetary in nature, some of the most attractive benefits stem from the way Southwest Airlines treats its employees. The history and background of Southwest Airlines helps explains how the corporate culture of the company came about. The corporate culture remains the way it was first established because of the type of motivational strategies that Southwest Airlines uses to keep its employees motivated.

Background

Southwest Airlines was started in 1967, but at that time, it was under the name Air Southwest. Rollin King and Herb Kelleher, co-founders of Southwest Airlines, decided to form the airline because they wanted to provide a low cost, no frills type of air travel service. Rollin King already owned a small commuter service and what really gave him the idea of Southwest was when he heard his banker John Parker complaining about how expensive and what a hassle it was to fly between San Antonio, Dallas, and Houston, Texas. Rolling King met Herb Kelleher when he went to use his law services for starting up the airline. After discussing the idea, they both decided to go into business together. Their ideas came from wanting to provide low cost budget airfares. They would be based out of Dallas/Ft. Worth, Texas and would fly to different locations within Texas such as Houston and San Antonio. It took almost two years of battling other airlines, including Continental Airlines, for Southwest Airlines to obtain its certificate to fly in Texas from the Texas Aeronautics Commission. Southwest finally won their United States Supreme Court appeal against other airline companies and earned their certificate to fly on December 7, 1970. (Southwest Airlines, n.d.)

Then in 1971, King and Kelleher started to look for a professional seasoned person in the airline industry to run their new operation and to break into the airline industry. They hired Marion Lamar Muse, the former president of Detroit-based Universal Airlines, to run Southwest Airlines. Southwest was broke and in debt when Muse came into the picture, but he instantly started to raise money for the new airline, hired new employees, and purchased a fleet of airplanes. Muse raised $300,000 ($50,000 of his own) and then received $750,000 from Wesley West, a wealthy man in Texas that he had previous business relations with. On June 18, 1971, their name transformed into what is now known as Southwest Airlines and they began to take off, literally. (Southwest Airlines, n.d.)

Over the years, Southwest began to grow rapidly. In 1973, after only two years of being in business, Southwest finally started to make money, and has remained profitable for every year since (even through the 9/11 tragedy) (Southwest Airlines, n.d.). Due to the 9/11 events, Southwest experienced a slight decrease in profits in 2001 and 2002; however they were still profitable. Since 2003 Southwest's profits have continued to steadily increase (See Table 1). Then one year later, in 1974, Southwest celebrated its 1 millionth passenger. In 1977, although their first public stock sold on June 8, 1971, Southwest Airlines finally became large and successful enough to list their company on the New York Stock Exchange. Their ticker symbol is LUV, which they use also as showing that they have nothing but LUV for their employees and passengers. In 1979, they had their first flight outside of Texas, which went from Dallas to New Orleans. By 1983, they had over 9 million passengers that year alone. (Southwest Airlines Fact Sheet, n.d.) In the year of 1989, Southwest reached 1 billion dollar revenue mark, and continued to exceed higher. (Southwest Airlines, n.d.) In 1994, Southwest implemented ticket-less travel, which was eventually implemented by other airlines domestic and international. In 2004, Southwest operated 417 Boeing 737 aircraft, expanded to over 70 million passengers a year, in 2,600 flights per day, to 60 airports around the United States. With that growth, it has made Southwest the 5th largest airline in the nation. (2004 Annual Report, 2004) Along with being the first airline with ticket-less travel, they were also the first airline to have their services provided online at their web page, www.iflyswa.com. Southwest Airlines' online sales amount to 40% of their business. (Southwest Airlines, n.d.) This shows that Southwest is always on the frontier of new technology and services.

Table 1

Income Statement

Fiscal year-end: December TTM = Trailing 12 Months

2000 2001 2002 2003 2004 TTM

Sales $Mil 5,650 5,555 5,522 5,937 6,530 6,709

Operating Income $Mil 1,022 631 417 483 554 ---

Income Tax $Mil

--- 317 152 266 176 ---

Net Income $Mil

626 511 241 442 313 363

Earnings/Share