Hi, this is Strategic Industry Airlines for( JetBlue Airlines and Southwest Airlines) , please read the both case Carefully,and i want you to write for me1 page and half, and know i will upload for you the 2case (JetBlue Airlines and Southwest Airlines)and the Requirements thinks .
IICose 2lli.ir"',ls "LUV" Getting Aggressive?"For 39 years, Southwest Airlines flourished with orgarricgrowth, betting that its competitive labor costs, 1ow fares,and unique corporate culture comprised the best arsenalagainst rivals. Yet with the U.S. air travel market stagnantand larger airlines consolidating into more dominant com-petitors, Southwest has been forced to rethink its tradi-tional business model in recent years. On Septemtrer 27,2010, Southwest announced an agreement to acquire alloutstanding shares of common stock of AirTran HoldingsInc., the parent company of AirTran Airways (AirTran),for a combination of $1.4 billion cash and Southwest Air-lines's common stock.l The acquisition, only the third inSouthwest's history, gave the discounter its first service inAtlanta, a Delta Air Lines fortress for decades, and moreflights from New York and Washington, D.C.2 Neverthe-less, it signaled a major departure from its traditional strat-egy of growing organically and conservatively.Analysts say Southwest had little choice but to pur-sue growth through truying up a rival. After expanding itsroute map to 69 airports in 35 states by the end of 2010,organic growth during recession was no longer a possibil-ity. Southwest was finding it impossible to expand at keybusiness airports like LaGuardia, New York, or to breakinto Washington-Reagan and Atlanta because of facilityconstraints. To add to its woes, Southwest's sole sourceof business-domestic air travel-had contracted inrecent years. As a result, the Dallas-based carrier posted aSl20 million loss in the third quarter of 2008 (its lirst in17 years) and has lost money in four ofthe past eight quar-ters. "We are not willing to make a bet on the economyor operating costs coming down," Chief Executive OfficerGary C. Kelly says. 'And that naturally leads us to havinga more energetic focus on 'Well, then how do we grow?'Fortunately for us, we found a situation that lets us dothar."lBackground and GrowthThe inconvenience and expense ol ground travel by busor automobile between the cities of Houston, Dallas, andSan Antonio- the Colden Triangle that was experienc-ing rapid economic and population growth during the late1960s--offered an opportunity for an intrastate airline.xThis case study uas prepared by Prolessor Naga Lakshmi Dmraju olTheIndian School ofBusiness, Professor AJan B. Eisner at Pace University, andProfessor Gregory G. Dess at the University ofTexas at Dallas. The puposeofthe case is to siimulate class discussion rather than to illustrate effective orineffective hantlling ofa business situation. The authors thank Mrs. Shefal:iMittal, Indian School of.Business, for her research assistance and ProfessorMichael Oliffat the University of Texas at Dallas for his valuable commentson an earlier version ofthis case. Several pads olthe case are from an earlierversion. Copyright O 2011 Dmmaju, Eisner, and Dess.The idea was suggested by Rollin King, a San Antonioentrepreneur who owned a small commuter air service,when his banker, John Parker, complained about the issue.King then talked to Herb Kelleher-a New Jersey--born,New York University Law School graduate who hadmoved to San Antonio in 1967 to practice law. They soonpooled the seed money to start Southwest Airlines. Theinfant Southwest Airlines 1SWA.1 fought long-drawn-outlegal battles. primarily engineered by the major airlines.for over four years before it got its first flight off theground rn 1971. Later on, the company had to work arounda regulation intended to penalize SWA's decision to oper-ate out of Dallas Love Field instead of moving to the newDallas-Fort Worth (DFW) airport. With Kelleher's bril-liant legal expertise and extensive lobbying of the Houseof Representatives, the issue was settled and SWA wasallowed to operate out of Love Field in 1979.The strugglefor existence in the initial years worked to the advantageofthe company, as the struggle created the esprit de corpsfor which the airline became so well known. The employ-ees were caught up in fighting for the "SWA cause" thatcreated "the warrior mentality, the very fight to survive,"according to Colleen Barrett, who became the presidentand chief operating officer of SWA in 2001. (She now isthe president emerirus. )aKelleher, however, was not the first chief executiveofficer of Southwest. Lamar Muse, an airline veteran whoworked earlier with Trans Texas, Central, and Universal Air-lines, was brought in to get the company offto a good start.That was followed by the brief tenure of Howard Putnam,another airline veteran, who was hired from United Air-iines, where he worked from 1978 to 1982. Herb Kelleherserved as the chairman of the board during that period;then he took the CEO position in 1982 and championedSouthwest's expansion (at that time the company had only27 plates and $270 million in revenues. and it flew to onlyl4 ciries).s SWA was one of a kind right from its beginning.It was the pioneer of the "low-cost strategy." It flew planespoint-to-point-short-haul fl ights bypassing the expensivehutr-and-spoke operations. It chose less popular, less con-gested airports 1o achieve quicker rurnarounds.SWA offered airfares so low that it gave the bus andcar travel companies a run for their money. It served nomeals on its airlines and provided only a snack of pea-nuts. That saved plenty of money and work. There wasno assigned seating. which reduced boarding times andhelped planes turn around faster. The average turnaroundtime for planes was around 25 minutes. The faster rurn-around times and higher aircraft utilization enabled theairline to operate with fewer planes and gate facilities thanwould othenvise have been necessary. SWA\ atffactiveflight attendants in hot pants were a source of live enter-tainment on flights (e.g., the flight attendants made funnypresentations of the otherwise routine and boring safety
inshuctions or performed preflight tricks such as poppingout of overhead bins).6 Southwest was the first major air-line to introduce ticketless travel and one ofthe first to putup a website and offer online booking.T It operated a singleaircraft type, the Boeing 737, that kept its training costslow and personnel utilization high, as having only one typeof plane offered great flexibility in personnel deployment.Starting with three Boeing 737s in 1971, the companyfleet grew to 548 Boeing 737 airqaft providing service to69 cities in 35 states throughout the United States by theend of 2010 (see Exhibits 1,2, and3).8The SWA Leadership and GultureThere are many stories about Herb Kelleher's flambo1'-ant style as CEO. He smoked cigars, loved Wild Turkel-whiskey, was often seen dressed up as Elvis..Presley, andpublicly arm-wrestled and defeated a rival conipany CEOio settle a dispute over an advertisement slogan.e Kelleherhuly believed that business could and should be fun utoo many companies, people put on masks when they cameinto the office. At work, people were not themselves andwould be overly serious, which explained why most busi-ness encounters were bland and impersonal. Therefore...,, hibit 1 * Financial and Operating Data for Southwest Airlines, 2006-2010 (year-end December 31)0perating revenues0perating expenses0perating incomeOther expenses (income),netlncome before taxesProvision for income taxesNet incomeNet income per share, basicNet income per share,dilutedCash dividends per commonshareTotal assets at period-endLong-term obligations atperiod-endStockholders' equity atperiod-end12,10411,1169BB2437452864590.620.610.01815,4632,8756,23710,350r 0,0882629816465990.130.130.01814,2693,3255,45411,02310,5744491710.01814,3083,4984,9539,8619,070791-2671,0584136450.850.840.01816,7722,0506,9419,0868,1 529341U0.01813,4601,5676,4497gt29r4tn0.frl0.6r2781001780.240.24Revenue passengers carriedEnplaned passengersRevenue passenger-miles(RPMs)(000s)Available seat-miles(ASMs)(000s)Load factor88,191,322114,213,01078,046,96798,437,09279.3%86,310,229101 ,338,22874,456,71098,001,55076.0o/o88,529,2341 01 ,920,59873,491,687103,271,34371.20o/o88,713,472101,910,80972,318,81299,635,96772.60%83,814,8896,276,$767,691,28992,663,02373.10%(continuedl