Southwest Airlines 2012 Annual Report Download - page 14

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capabilities. In addition to the Company’s five major strategic initiatives, the Company has continued to design,
implement, and manage other strategic initiatives to increase revenues, improve cost controls, and attract and
retain Customers. All of these initiatives are designed to contribute to the Company’s achievement of its pre-tax
return on invested capital target of 15 percent.
Major Strategic Initiatives
Integration of AirTran
During 2012, the Company continued the process of integrating AirTran into its operations and
accomplished the following key integration milestones:
• The Company received a single operating certificate from the FAA, which allowed the Company to
begin the operational integration of Southwest and AirTran.
• The Company finished moving all of AirTran’s headquarters functions to Dallas, integrated the
Finance and Human Resources systems, and transferred over 2,100 AirTran Employees to
Southwest, including all remaining headquarters Employees and most Maintenance & Engineering
Employees.
• The Company continued to further optimize AirTran’s route network by, among other things, closing
14 airports that proved unsustainable and redeploying AirTran aircraft in other markets. During
2012, AirTran added Mexico City and Cabo San Lucas to its route network and added new
international service from Denver, Colorado; Chicago, Illinois; Austin, Texas; San Antonio, Texas;
and Orange County, California.
• The Company began converting AirTran 737-700 aircraft to the Southwest livery. As of
December 31, 2012, 11 out of a total of 52 AirTran 737-700 aircraft had completed the conversion
process and re-entered service as Southwest aircraft. The Company expects to transition an
additional eight AirTran 737-700 aircraft into conversion during 2013. The Company expects to
convert the majority of the remaining AirTran 737-700 aircraft in 2014.
• The Company further coordinated Southwest and AirTran flight schedules, launched booking tools to
allow Customers of both airlines to book flights on either carrier via southwest.com or airtran.com,
and made significant progress towards implementing connecting capabilities between the Southwest
and AirTran reservations systems to allow Customers of Southwest and AirTran to book connecting
itineraries between the two carriers. Full deployment of connecting capabilities is expected to occur
in early 2013.
• The Company took further steps towards integrating the frequent flyer programs of Southwest and
AirTran by enabling Customers to transfer their loyalty rewards between the Southwest and AirTran
frequent flyer programs.
• The Company significantly grew the Southwest network by converting AirTran service to Southwest
service in several new markets, including full conversions of Washington Dulles in second quarter
2012, Seattle, Washington and Des Moines, Iowa in third quarter 2012, and Key West, Florida in
fourth quarter 2012. In January 2013, the Company fully converted its AirTran operations in
Phoenix, Arizona to Southwest.
• The Company completed all of its AirTran airport facility transitions, where the two airlines both
operate, by moving certain facilities in shared locations from one carrier to the other wherever
possible.
• The Company continued its progress towards integrating Southwest’s and AirTran’s unionized
workforce. Southwest’s Aircraft Mechanics, represented by the Aircraft Mechanics Fraternal
6