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FINANCIAL RESEARCH REPORT
WEEK 9

Jonathan Jackson
Dr. Daniel Terfassa
9/11/2015
FIN 534

Introduction Southwest Airlines was founded in 1971 by Herb Kelleher and Rolling king. The company started its services for San Antonio, Dallas and Houston. In the mid-1980s, the company was first to offer the frequent miles program. This program allowed travelers to bank traveled air miles to be used latter credit for a reduced airfare or free ticket. It was the first airline company to offer senior discounts, fun packs and fun fans. From 1981 to 1984, the company continuously received the top ranking of number 1. By 1998 Southwest Airlines had become 5th largest US air carrier, caring more than 50 million passengers per year servicing the Southwest and Northwest and other primary locations all across the United States. In 1987, the company took over TranStar Airlines and Morris Air in 1994. This gave Southwest Airlines a stronger edge in the market. Originally the company was incorporated for serving three cities in Texas as Air Southwest on March 15, 1967, by Herb Kelleher and Rollin King. The airline experienced a great history of success, it adopted the first profit sharing plan in the US airline industry 1971. Employees own almost 10% of the company stock through this plan and others as well the company is almost 87 percent unionized. The pilots are represented by the pilot association of Southwest Airlines which is a union separate from the much larger Air Line Pilots Association.

Rationale and Significant Factors driving your decision as a Financial Manager

There are several good reasons of selecting Southwest Airlines. It is the only domestic air carrier which remained profitable since 1971. While airline industry is currently out of investor's favor Southwest airlines is still attractive for long term investments, because of being undervalued. A…...

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