Description
This case highlights a pioneering airline company with humble roots, an enduring
culture shaped by a maverick leader, and a record of success in an industry where most
companies have failed to prosper in the decades since deregulation. Southwest Airlines’
history is a case study in itself, but this case analysis focuses on industry and competitive
conditions that face all U.S. airlines. It does provide an opportunity to examine Southwest
Airlines’ distinctive strategic approach and the company’s remarkable performance
record. Furthermore, it allows speculation about whether the firm’s long-term strategic
competitiveness is threatened by inevitable change in the general, industry, and
competitor environments within which Southwest Airlines operates. The foremost matter
for consideration is the company’s 2011 acquisition of AirTran – not only the anticipated
organizational impact that integration will have on the firm’s culture, operations, systems,
and strategy, but the crucial step of entering international markets for the first time.
The case opens with a discussion of the U.S. airline industry, including extensive
industry metrics for major carriers. A detailed explanation of industry economics follows,
along with remarks on recent industry performance. The case then turns its attention to an
in-depth look at the background, operations, and performance of Southwest Airlines. The
leadership of founder Herb Kelleher and the pervasive Southwest spirit are also presented
before delving into firms that have attempted to emulate Southwest Airlines’ successful
strategy – the most noteworthy amongst these being JetBlue Airways. Finally, the case
wraps up by describing the company’s recent expansion initiatives and its acquisition of
AirTran Airways. Fully armed with an understanding of the company and the industry
and competitor environments, an attempt can be made to address the challenges
confronting Southwest Airlines in the immediate and long-term future. A comprehensive
analysis enables a discussion of the opportunities and challenges facing Southwest
Airlines and an assessment of the firm’s readiness for evolving conditions.
identify and explore the opportunities and challenges presented by Southwest
Airlines’ acquisition of AirTran. What are the merits and concerns of using the
acquisition to launch the company’s expansion into international territories?
HINTS:
Type of acquisition (horizontal, vertical, related)
Results of acquisition
Southwest experience with integration of acquisitions
Trends in domestic airline market. In international market.
Acquisition versus alternative strategies for growth opportunities
Air Trans acquisition as potential compromise to Southwest’s strategy and
business model
