Southwest Airlines -- what a great company

Brian Perry

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After debating the airline bailout (which I believe is too big and needs to be modified) with many of my friends, I recently came across the story of one airline that is not crying poor, not on the brink of collapse, but instead is very well managed. The airline is Southwest.
I hadn't thought of Southwest over the past several days, mainly because they've stayed out of the news. They have not laid off one worker since the attacks. According to Herb Kelleher, Southwest's founder, the company has a lot of cash, a good balance sheet, and was prepared for an emergency. He was quoted as saying that he doesn't feel his employees should be penalized if it's not necessary. This is in direct contrast to many of the other major airlines which have cited force majeure (wartime measures) as an excuse not to pay severance to furloughed workers.
It will be interesting to see how shareholders respond to this policy, which I think is a really admirable one. I think at some point he would make cuts if he thought they were in the best long-term interests of the company, but can you imagine the loyalty he will receive from the employees and families he is taking care of during these times?
Mr. Kelleher, I tip my hat to you.
(By the way, I am not a Southwest Airlines' employee or shareholder, but I may become the latter very soon.)
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Carl Johnson

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If the major airlines are operating on such slim margins that they require billions of taxpayer dollars to stay afloat then they deserve to fold. It's not like air travel would cease to exist, other companies like Southwest would rapidly fill the void.
 

Kevin Coleman

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I also applaud Southwest but I don't think they are going to be able to hold out for long. Southwest deffered delivery of 11 planes that were scheduled to be delivered this year.
The airline business has always been very volatile and it always will be. They are very easily affected by things like war, recession and oil prices. That is just the way it is. It is called competition.
I work for boeing in Wichita. I just found out tonight that I will no longer have a job as of Dec.14th. Just becuase Boeing is laying off dosn't mean they are not a good company. It is just economic reality. The airlines simply don't need the aircraft we currently have on the line. Boeing is honoring the 60 day notification that you will be layed off I am thankful of that. They are also honoring severance pay that they contractually don't have to.
Kevin C.
 

Philip_G

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southwest is an AMAZING company. AMAAAAZING. The only other company I can think of to turn a profit every single financial quarter is jet blue (including their very first) and that's almost 30 years after southwest did it. In the airline industry it's an incredible feat. their airplanes are in the air something like 14 hours a day vs 12 or whatever that other airlines run, their turnaround is about half the time as others. Southwest doesn't even consider other airlines competition, they consider their main competitor to be ground based tramsportation. They've found their niche and will stick to it. They choose their service markets VERY VERY well.
seriously... they're a company to study and imitate. Their CEO (well, former, I think he stepped down) is an incredible guy too I hear. I guess he meets every employee eventually, and has an amazing ability to remember names and faces, so he remembers you.
one thing they do I hear is when you're interviewed, talk to ANYBODY you might come in contact with, receptionist, people in elevators.. and make a decision based on that. I heard a story about a pilot that they had not planned to hire, and they were watching him walk across the parking lot, and stop to pick up a piece of trash blowing around and throw it away, and they decided to hire him.
southwest and fedex IMO are the 2 largest success stories in of the deregulation era... and both awesome companies (don't get me started on fedex)
[Edited last by Philip_G on September 29, 2001 at 02:04 AM]
 

John Thomas

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There is some details being left out of the discussion. These people are being asked to 'donate' time to the company to keep their jobs. That's right, work for free and you keep your job. Now, I'm not sure if everyone must do this in order to keep their job, but that is going on.
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The only thing we have to fear is fear itself. -Franklin D. Roosevelt.
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Nathan*W

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These people are being asked to 'donate' time to the company to keep their jobs. That's right, work for free and you keep your job.
Where did you hear/read/see this information? I'm only asking because it does not fit in with Southwest's business model or corporate philosophy.
-Nathan the Newbie
 

Travis Hedger

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Well my wife's friend works reservations in OKC. No working for free there. Lots of mandatory overtime however.
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Travis -- "Contrary to popular belief, Travis Hedger, DID NOT infact invent DVD. He was just a very enthusiastic fan!!!"
 

Philip_G

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I have not heard anything about them asking employees to work for free....
allthough I think as happy as a lot of their employees are, they probably would if it meant keepin a job they love.
 

Greg_Y

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Where did you hear/read/see this information? I'm only asking because it does not fit in with Southwest's business model or corporate philosophy.
I also heard this. Yesterday on Fox News. An analyst said "if you've got people working for 'free', you've got layoffs anyway."
 

Matt Pasant

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Southwest is an excellent company. I have studied them in many many case studies in my mba courses. They have a great combination of low costs and company culture that is just unbelievable. Their human resourse management has done phenominal jobs at finding the right people for their company. Annually, 100,000 apply and roughly 4,000-5,000 are hired. They find those people who are loyal, dedicated, willing to work for lower pay, etc., etc. etc.
I have studied hundreds of companies, and usually the policy set for is just words. At Southwest, its religion. And Herb Kelleher (who is now retired as CEO) is the man who has made it go.
-- Matt
 

Glenn Overholt

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I am glad that Southwest didn't ask for anything, and the others should be ashamed for asking for anything.
Sure, they are in business to make money, but the fares are so low compared to what they were before. (Just last week, one airline had a round-trip fare from Portland, Oregon to Orlando for $109). What are they thinking?
No, we should have let them all fold up. Others would have grabbed them up quickly. Members of the Forbes top ten list would get them going quickly again.
Glenn
 

Philip_G

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I have studied hundreds of companies, and usually the policy set for is just words. At Southwest, its religion. And Herb Kelleher (who is now retired as CEO) is the man who has made it go.
a LOT of mba programs use SWA as a model and study them. From the aviation operations side I've studied them a bit, one of my professors has met Herb, I guess he's a SUPER cool guy to sit down and chat with (well since he's drunk probably 20 hours in a day that might help haha)
 

John Thomas

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Getting back to this, I believe it aired on World News Tonight. From the look of it, it wasn't salaried employees, it was the blue-collar folks (maintenance, clerks, baggage handlers) that were 'donating' time. For example, they'd work and get paid for 4 days in a week then be asked (or 'given the option') to work the 5th day for no pay.
I recall the same quote that Greg brought up in the piece.
As far as business model, early in their history I believe they had to sell one of their four planes to make payroll.
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The only thing we have to fear is fear itself. -Franklin D. Roosevelt.
My Top 10 of 2000 My Top 10 of 2001
 

Philip_G

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Anyone know the story about their first day? I think it was SWA that had a pretty long legal battle before they could begin operation, and started with something like 50 or 500$ in their account after paying lawyers.
 

Justin Lane

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They have a good business model, but flying on Southwest can be pure hell at times.
First off there are no assigned seats...literally it is a free for all to get in what seats are available based on your check in time, meaning many times families get split up (which may actually be a god thing on a long flight
).
They do not serve meals even on long flights coast to coast. You usually just get a little cracker/cheese pack.
Also be prepared to have switch overs numerous times. I once had to switch planes 3 times on one flight.
For the price they really can't be beat. It is not too much of a hassel for myself flying on SOuthwest, but I could see where you could run into problems with children or the elderly.
J
 

Kirk Gunn

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I believe SWA is the first to have a lawsuit brought for Middle Eastern discrimination. 3 males were asked to deplane after many passengers stated they would not fly on a plane with them aboard.
Sadly, this is probably just the first.
 

James Q Jenkins

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It will be interesting to see how shareholders respond to this policy, which I think is a really admirable one.
Well, since SW is an employee-owned company my guess is that the shareholders will be happy.
Employee owned companies are peculiar.
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-JQJ
 

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