Some of the best minds in business have entered the commercial airline industry and failed. Included in this group is Warren Buffett, who invested in U.S. Air during the 1990s and was unsuccessful in saving the airline. Since the inception of commercial flight, more than 200 airlines have tried and failed in the commercial airline industry. These companies are a reminder that this business is tumultuous, complex, and in many cases, futile. Herb Kelleher, one of Southwest Airlines’s founders, illustrates his awareness of how difficult it is to achieve any modicum of profitability in this industry with his comment, “If the wright brothers were alive today Wilbur would have to fire Orville to reduce cost.”
Financial distress in the airline industry can be tied to the high costs incurred by the airlines to offer their services and low costs demanded by customers to travel. In an already extremely challenging industry, Southwest costs incurred to meet safety regulation on its aircraft, and a dispute with a labor union.
These issues make the current and future decisions of the company more critical than ever. Fortunately for Southwest, the current president and CEO has a vast amount of experience within the company.
Some of the best minds in business have entered the commercial airline industry and failed. Included in this group is Warren Buffett, who invested in U.S. Air during the 1990s and was unsuccessful in saving the airline. Since the inception of commercial flight, more than 200 airlines have tried and failed in the commercial airline industry. These companies are a reminder that this business is tumultuous, complex, and in many cases, futile. Herb Kelleher, one of Southwest Airlines’s founders, illustrates his awareness of how difficult it is to achieve any modicum of profitability in this industry with his comment, “If the wright brothers were alive today Wilbur would have to fire Orville to reduce cost.” Financial distress in the airline industry can be tied to the high costs incurred by the airlines to offer their services and low costs demanded by customers to travel. In an already extremely challenging industry, Southwest costs incurred to meet safety regulation on its aircraft, and a dispute with a labor union. These issues make the current and future decisions of the company more critical than ever. Fortunately for Southwest, the current president and CEO has a vast amount of experience within the company.
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