Southwest Airlines Wants To Grow But One Constraint Remains

Southwest Airlines is sitting in a really great position. With the worst of the crisis behind it, leisure passengers have come back, small- and medium-sized businesses are sending employees on the road again, and travel restrictions have started to come down. With the environment improving, Southwest Airlines is in a position to grow. However, according to CEO Gary Kelly, there is one open-ended question on whether or not the carrier will be able to grow.

Southwest Airlines’ four categories for growth

In order to grow, CEO Gary Kelly stated on the carrier’s second-quarter earnings call that it is looking at four big categories to drive that growth:

  • Airplanes
  • Airports
  • Money
  • People

Essentially, Southwest Airlines needs to have the airplanes to fuel that growth. After ticking that box, the airline then needs to turn to airports and ensure they can get the gate space, the counter space, and other infrastructure support systems. These two are some of the basic requisites for growth from the airline operations side of things.

Turning then to money, growth comes at a cost. The carrier needs money to invest in the new aircraft to fuel growth, the airport infrastructure, and it will need to devote a sizable marketing budget to spread awareness in the new communities it adds services to.

The last question then comes down to people. Southwest Airlines needs to have the staff in each location – from ramp staff to gate agents to check-in agents – to handle the carrier’s operations. On the latter two points, Mr. Kelly stated the following:

“We’ve got money…we have more money right now than I thought we would three months ago or six months ago. So I’m feeling really good about the balance sheet and our liquidity, and I think you’re down to…people resources, and that I think we’ll be our constraint.”

Source: Texts are Excerpted from an Article by Simple Flying.

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