Southwest Airlines To Spread Its Wings Overseas
Investors in the troubled U.S. airline industry are familiar with Southwest Airlines Company (LUV). It is the largest low-cost carrier in the United States and has for years been able to turn low costs and friendly service into a relatively (to its peers) high margin, profitable business.
It is also well-run on the financial side as, unlike it main competitors, its total debt is approximately equal to its cash position. Most other major airlines have high debt in proportion to cash, which has led to a series of bankruptcies for a number of its competitors such as AMR Corporation (AAMRQ.PK) which is still in bankruptcy and US Airways Group (LCC) which was in bankruptcy twice in the last decade.
But now, changes are in the wind for Southwest. It is busy assembling the pieces necessary for a concerted major-time move into territory where it has rarely ventured . . . international markets.
Southwest's senior management has set a goal of doubling within five years the amount of overseas flying the airline does, which is very small at the moment. Last year's acquisition of AirTran, the biggest in the company's history, was one step toward international expansion as AirTran brought with it short-haul overseas destinations generating about $75 million in annual revenues.
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