In 1998, US airlines carried a record of 551 million passengers1. At that time,the whole industry was in a pretty good shape2. Unfortunately, many things have changed since then. The 2001 terrorist attacks on the twin towers have marked a turnaround in the United States of America's history, and especially in the Airlines industry. From that time, people avoid flying too much and new restrictions arose, which made traveling sometimes inconvenient. As a result, thousands of employees were laid off, many airlines went bankrupt, and the Congress had to pass a $15 billion bailout package in order to reduce damages. Within this difficult context and the phenomenon of strong competition some have taken the turn of the 'low cost service' in order to attract more people and different economic classes. Some of them have done well in comparison to old school major companies. In this case we find Southwest Airlines, which has been the most profitable airline company since 19733.
[...] Overview of the financial statements 1. The Income Statement Definition 'An income statement is a financial statement that measures a company's financial performance (how much revenue and profit a company has generated) over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year.'4 Analysis Net Income The first thing to look at when analyzing an income statement is the Net Income. [...]
[...] This is the case of Southwest Airlines that conducts a quarterly analysis of its financial situation. Also Web based companies generally conduct those analyses or even more times a year because of the regular changes that arise in this market and the constant need to optimize the performance of the company Page 5 of 33 INTRODUCTION In 1998, US airlines carried a record of 551 million passengers1. At that time, the whole industry was in a pretty good shape2. Unfortunately, many things have changed since then. [...]
[...] It looks like the company is investing a lot of money back rather than distributing it to its shareholders www.investopedia.com 29 Page 30 of 33 CONCLUSION After having analysed Southwest's financial statements and ratios, we can thus say that Southwest has well managed the changes that occurred in the Airlines industry. It keeps working on its situation in order to improve it and maintain a sustainable, interesting growth. What is also to underline is that Southwest is a national company, it has thus not been affected by SARS for example. [...]
[...] Financial analysis is crucial when a major event impacts the company in order to limit damages or even to get some money out of those negative situations. Some companies managed well, some not so well and many went bankrupt. Southwest is one of the companies that did well. We are now going to see what the major events are that impacted the Airlines world. A. September 11th 2001 September has been the main factor of trouble for most of the air industries worldwide. [...]
[...] Therefore, the companies have to constantly asses its financial position and optimize it in order to improve its performance within the airlines industry Cash Ratio ((Cash + Short Term Securities)/Current Liabilities) Definition 'Cash ratio is useful to know the proportion of a firm's assets held as cash and its ability to use cash to pay its short term debts.'8 Results 2007 SOUTHWEST www.investopedia.com 21 Page 22 of 33 If the ratio is it is too high, it shows that the company does not use its cash with efficiency, it could invest more. [...]
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