Southwest Airlines 2000 Annual Report Download - page 17

The future of Southwest Airlines and the freedom to fly
have never been brighter. From sea to shining sea, our
team stands ready to meet the challenges of the new
millennium. Our past victories have made Southwest
financially and competitively strong, so we can continue to
expand our low-fare influence across the country, making
the dream of flight a reality across America.
We remain the undisputed low-cost winner in the airline
industry and continue to widen the margin even
further. In spite of our rapid growth and the
complexity of the airline industry, we produced
free cash flows in 2000, covering all of our
capital expenditures needs. Our balance sheet is
remarkably strong, as evidenced by Standard &
Poor’s recent upgrade of our senior unsecured
debt rating to “A,” the best in our industry. This kind of
financial strength provides our team enormous flexibility to
grow and maximize long-term Employee and Shareholder
value, regardless of industry consolidation or an economic
slowdown.
We have an extensive, diverse route system that spans
from coast to coast, and we have a substantial presence in
the markets we serve. At yearend, we served 58 airports
in 29 states. As a result of our low-fare philosophy, we are
the largest carrier at many of the airports we serve. Our
low fares generate substantial demand, which allows us to
offer lots of convenient flights. For example, our top ten
cities’ daily departures are currently: Phoenix, 180; Las
Vegas, 166; Houston Hobby, 151; Dallas Love Field, 139;
Los Angeles, 123; Baltimore/Washington, 122; Chicago
Midway, 121; Oakland, 115; Nashville, 87; and St. Louis,
85. This is very different from our hub-and-spoke
competitors, which have large concentrations of flights at a
couple of “hub” cities. Our capacity is spread throughout
the United States, with 45 percent in the West; 25 percent
in the East; 16 percent in the Midwest; and 14 percent in
the Heartland region (Texas and surrounding states).
With only 57 cities at yearend and less than ten percent
of the domestic market, we have significant opportunities
to expand our route system in both new and existing cities.
We had great success in our New York expansion
efforts with the addition of Albany and Buffalo in 2000. In
January 2001, we will respond to the need for more
Florida service with the addition of West Palm Beach. As
the demand for additional aircraft throughout our existing
system has never been greater, West Palm Beach could
prove to be our only new city in 2001. At this point, we
plan to add 25 Boeing 737-700s in 2001 and retire four -
200s, which represents an increase in available seat
miles of roughly 11 percent.
Because of our confidence in the future of
Southwest and to ensure we have adequate
aircraft to meet future demand, Southwest
increased our commitment to Boeing’s “Next
Generation” 737 aircraft with an order for up to
290 Boeing 737-700s, which is included in the
accompanying chart. This was our single largest aircraft
order and the largest order ever for Boeing’s Next
Generation family of aircraft, bringing our total aircraft on
order, including options and purchase rights, to 450
aircraft at yearend 2000.
As we enter the next millennium, we honor the People
of Southwest and express our excitement for our future
with a fresh new look for our fleet. To celebrate our past
as well as our future, all Boeing 737 deliveries from this
day forward will be in our new “Canyon Blue” exterior
color scheme and “Canyon Blue” and “Saddle Tan” all-
leather seating configuration. Our existing fleet will be
retrofitted over time into the new livery. In typical
Southwest fashion, this new look and interior will not
raise Southwest’s costs or result in higher fares. It’s just
our way of paying tribute to the past and renewing our
commitment to provide the
Freedom to Fly to many more
Americans for generations to
come.
Tim Breeding, Information Systems, Audit Project Leader
Robert Quintanilla, Senior Manager, Technical Services
Ross Holman, Vice President — Systems