Southwest Airlines 1997 Annual Report Download - page 21

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21
SOUTHWEST AIRLINES CO. ♥ FIVE SYMBOLS OF FREEDOM
THE FUTURE OF FREEDOM LOOKS BRIGHT, AS
LONG AS WE RENEW OUR PLEDGE EVERY DAY.
OUR NEXT NEW CITY WILL SHARE ALL THE
BENEFITS OF ALL OUR EXISTING CITIES, INCLUDING
OUR LOW FARES AND TRIPLE CROWN SERVICE.
Southwest is financially and strategically positioned to take advantage of
short- to medium-range point-to-point opportunities. We remain the
undisputed low cost leader in the airline industry and are continuing our
efforts to widen the margin even further. In spite of our rapid growth and
the intense competition we’ve faced, operating cash flows have been
remarkable, covering almost 90 percent of our capital expenditures in
1997. Our balance sheet remains very strong, as evidenced by “A-” credit
ratings from the three agencies that rate us (Standard & Poor’s, Moody’s,
and Duff & Phelps). This ensures adequate and cost-effective access to
the capital markets to meet future expansion needs.
While the industry continues to demonstrate unprecedented capacity
restraint, Southwest will continue its strategy of controlled growth. In
January 1998, Southwest announced its increased commitment to
Boeing’s Next-Generation 737-700 by exercising options on 47 -700s for
delivery in 1999-2004 and by ordering an additional 12 -700s for delivery
in 2000-2004. In addition, we obtained 42 more options from Boeing for
delivery in 2004-2006. These 59 additional orders and 42 additional
options bring our future commitment, as of yearend, to 188 aircraft and
make Southwest Boeing’s largest customer for the best selling Next-
Generation 737s.