Southwest to Hold off on Growth

According to new reports, it now appears that Southwest Airlines may be deciding to hold off on their expansion plans. If this is the case, the company will hold off on expanding until late in 2014. Mostly, this has to do with the fact that the price of oil (which is as high as $100 a barrel) is cutting in deep to their profits.

After this announcement was made by Gary Kelly, who is the chief executive officer of Southwest Airlines, shares for the company rose by the most they had in over four weeks. Thus, it seems that investors are keen to the idea of holding off expanding until a later date.

Kelly went on to say that flights and seating capacity for this airline will remain unchanged this year. So far, the airline has not made a final decision for the year of 2013. However, it is very possible that flights will remain the same through that year as well. They do not sense that they are going to see a significant increase in capacity in 2013, if there is any at all.

Currently, this airline, which is based in Dallas, is under a lot of pressure to curb its history of expanding faster than its peers. This is something that the industry is known for, and Southwest Airlines is now going to have to fight that. That is because Southwest Airlines is paying, on average, 35 percent more for each gallon of jet fuel than in 2011.

Ray Neidl, who is a Maxim Group LLC analyst in New York, said that Southwest Airlines has always been the bad boy of the industry. The group now realizes that they have to be a logical player, as the other airlines have reduced their costs and become more competitive. Things have to change for Southwest Airlines as well.

Stocks for the airline climbed by 3.3 percent to $9.32 at 11:28am in New York at the end of last week. This is the biggest advance that the airline has seen since December of last year. This is a positive sign, and one that shows that canceling its growth plans for this year was a welcome move by investors

Mr. Kelly went on to say that there is waste in every company. On top of this, there is always a never-ending search to eliminate waste and increase the productivity of said the company. Southwest Airlines is no different. This company is going to ramp up those efforts this year more than it has ever done so in the past. He also wants to assess Southwest’s success in integrating operations with those of AirTran. This is the company that they acquired back in May of last year.