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Economic Analysis of Southwest Airlines

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Economic Analysis of Southwest Airlines

Facilitator: James Young
MGT: 513 Managerial Economics
October 14,2012

Economic Analysis of Southwest Airlines
History of Southwest Airlines
History and Key Defining Moments
Southwest Airlines was founded in 1966 when a group of Texas investors pooled together 560,000 to form the Air Southwest Company, incorporated in 1967 the company was envisioned as a commuter airline serving the cities of Texas, Dallas, Houston and San Antonio. Although the Texas Aeronautics Commission (TAC), the body responsible for overseeing aviation within the state granted the company permission to fly the routes requested in February 1968, three competing airlines filed suits to prevent the airlines form getting off the ground. An attorney, who stake in the company was a mere 20,000, took the case all the way to the U.S. Supreme court and in December 1970 this court ruled in the favor of Air Southwest. Early in 1971, Air Southwest changed its name to Southwest Airlines, the fledgling airline began operations on June 18, 1971 under the stewardship of President M. Lamar Muse, the airline offered six daily roundtrip flights between Dallas and San Antonio, and twelve daily roundtrip flights between Dallas and Houston. The start of service in June 1971 was accomplished with three 737-200 aircrafts that had been obtained from Boeing on favorable terms, and a fourth aircraft was obtained in September of 1971. The rest of 1971 and 1972 saw operating losses, Southwest turned its first annual profit in 1973, and has done so every year since a record unmatched in the commercial airline industry history. By the end of 1975, the company had acquired its fifth plane, and it’s stock was listed on the American Stock Exchange under the ticker symbol “LUV,” in 1977 its stock was transferred to the New York Stock Exchange which the company then...

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