Southwest Airlines 2011 Annual Report Download - page 36

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Risk Factors Related to the Company’s Acquisition and Integration of AirTran
The Company may be unable to effectively integrate AirTran’s business and realize the anticipated benefits
of the acquisition. In addition, delays in integration could cause anticipated synergies to take longer to
realize than currently anticipated.
The Company must devote significant management attention and resources to integrating the business
practices and operations of AirTran. Potential difficulties the Company may encounter as part of the integration
process include the following:
• the inability to successfully combine the AirTran business with that of the Company in a manner that
permits the Company to achieve anticipated net synergies and other anticipated benefits of the
acquisition;
• the inability to successfully maintain passenger unit revenues upon converting AirTran into the
Southwest business model;
• the challenges associated with operating an aircraft type new to the Company, the Boeing 717;
• the challenges associated with an expanded or new presence in more congested airports and markets;
• the challenges associated with new international operations, including compliance with international
laws;
• the challenges associated with integrating complex systems, technology, aircraft fleets, networks,
facilities, and other assets of the Company in a seamless manner that minimizes any adverse impact on
Customers, suppliers, Employees, and other constituencies;
• the challenges associated with integrating the Company’s workforce while maintaining focus on
providing consistent, high quality Customer Service; and
• potential unknown liabilities, liabilities that are significantly larger than the Company currently
anticipates, and unforeseen increased expenses or delays, including costs to integrate AirTran’s
business that may exceed the Company’s estimates.
Any of the foregoing factors could adversely affect the Company’s ability to maintain relationships with
Customers, suppliers, Employees and other constituencies or the Company’s ability to achieve the anticipated
benefits of the acquisition on a timely basis, or at all, or could reduce the Company’s earnings or otherwise
adversely affect the business and financial results of the Company. In addition, integration requirements have
caused, and may continue to cause, the Company to delay other strategic initiatives.
The Company’s future results will suffer if it does not effectively manage its expanded operations.
Upon completion of the Company’s acquisition of AirTran, the size of the Company’s business increased
significantly beyond the then current size of either the Company’s or AirTran’s businesses. The Company’s
future success depends, in part, upon its ability to manage this expanded business, which may pose substantial
challenges for management, including challenges related to the management and monitoring of new operations,
including new international operations, and associated increased costs and complexity. There can be no
assurances that the Company will be successful or that it will realize the expected operating efficiencies, cost
savings, revenue enhancements, and other benefits currently anticipated from the acquisition.
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