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Southwest had an awful week, no doubt. But while it is easy to jump on the bandwagon and point fingers at a train wreck, at the end of the day LUV has a market
by listenallyall 4y ago
Southwest had an awful week, no doubt. But while it is easy to jump on the bandwagon and point fingers at a train wreck, at the end of the day LUV has a market cap approximately equal to United and American combined, and just a touch below Delta's. While the 3 majors have all declared bankruptcy at some point in the past 20 years, LUV never has. It also recently re-instated its dividend, which the majors haven't done yet. The majors each rely on a mini-monopoly by dominating 3-4 hubs each where they have enormous pricing power (except when a JetBlue, Spirit, etc comes in to compete) while LUV is often reactionary, operating a large number of unique, convenient routes that are underserved by the majors and the hub-and-spoke model.
Of course LUV should spend some money and modernize their systems but a) there's probably not a single software developer who understands the full scope and difficulty of such a project (meaning you should dismiss any comment that sounds like "why don't they just...") and b) without hubs, what they are already executing every single normal day is likely a lot more complicated than what the majors ever attempt.
This isn't an excuse, or a waving off of LUV's serious issues. It's perspective, I guess.
- pknomad 4y agoIt's a good perspective for sure. I also understand that the non-hub p2p model exposes LUV in ways it doesn't for other airline carriers. I gotta say tho - it is extremely tiring to keep seeing "shit happened because bean-counting C-level decided to over-prioritize profits over product and the company rots from within" motif. Happened with Boeing, GE, and now Southwest I guess. https://archive.is/5vXIZ https://archive.is/5vXIZ https://www.reddit.com/r/SouthwestAirlines/comments/zxg6op/the_history_of_swa_destruction_from_within/ https://www.reddit.com/r/SouthwestAirlines/comments/zxg6op/t...
- listenallyall 4y agoAs long as Southwest continues to allow not just one, but two free checked bags per person, I can't entirely buy into the "bean-counters maximizing profits" theme. They could EASILY start charging per bag, or at least for the second bag. Or for Wanna Get Away fares. But they don't. Ever. For anyone.
- milkytron 4y agoI think what the other commenter meant by bean counting CEO, is that they don't prioritize resilience and quality in their operations. In Boeing's case, they deprioritized the engineering culture with intense timelines and punished people who would want to take the time to ensure quality. This led to meeting targets, higher profits and reduced costs, but increased risk. In Southwest's case, it seems (from what I've read) that over the past two decades of CEO's, they didn't prioritize improving their backend software systems. Which seems similar to Boeing: improve profits, but increase risk.
- bsder 4y agoThe problem is that IT investment is like buying insurance. You are paying now to avoid trouble later. As an executive, I don't give one iota of damn about cost later past 36 months but I care a lot about cost in my budget now. Therefore, I will schedule any IT "upgrades" well past my 36 month point and leave it on somebody else's balance sheet. Many people at Southwest knew this was coming. Southwest had various meltdowns before Covid that were flagging this. Covid gave them a reprieve. However, now that travel is ticking up, the problems came home to roost with a vengeance.