Monday, April 23, 2007

Southwest's 85 page annual report is a slick marketing piece. The opening page of the annual report includes graphs and charts showing the company's net income and consolidated highlights. The following pages include extremely colorful pictures both real and fake. Interestingly, the fake pictures are drawings of CEO Gary Kelly, President Colleen Barrett and Chairman of the Board Herbert Kelleher. The annual report goes on to show real photos of southwest airplanes, employees and customers. A majority of the pages include graphs to display company numbers.

The Southwest Airline's website simply posts their annual SEC filings under the Investor Relations link. When you arrive at the page that displays the SEC filings in chart form, you are able to download the statements by choosing either Microsoft Word or Excel, an HTML document or Adobe Reader. The chart displayed on the opening SEC Filings page shows the date it was filed on. Also included within the SEC filings page is the option to view 10-K(annual) filing very simply.

The goal of Southwest's annual report seems to be their opportunity to tell their company's story. The annual report really shows the strengths of the company, the achievements of the company and the future goals of the company. The annual report begins by stating who the company is and Southwest's history in story form. Within their opening statement they explain their customer service initiatives and state that they have one of the best overall company customer service records. Throughout the annual report graphs and pictures are shown which helps to keep the reader's attention.

Through the letter to the shareholders, Southwest conveys several messages. The letter is opened up by telling the shareholders that Southwest just experienced their 34th consecutive year of gaining profit which no other airline has ever done, this message allows the shareholders to understand that Southwest continues to satisfy their customers which results in gaining profit year after year. The letter then sends the message to the shareholders that the company performs above and beyond which results in customer satisfaction and strong revenue growth. The tone of the letter is glowing and informative. The letter demonstrates "glow" as it talks about Southwest employees and how they have done an excellent job making customers happy and how they have worked extremely hard to lower airline fuel costs. The letter informs Southwest shareholders of the company's previous achievements, spectacular improvements and also goes into detail about their plans to expand the flight route network, the letter states that "In 2007, we presently plan to add 37 new Boeing 737s to our fleet of 481 aircraft." This letter is extremely creditable and believable, it is very honest and gives valid statistics. The letter was signed by CEO Gary Kelly, President Colleen Barrett and Chairman of the Board Herbert Kelleher.

This news release titled "Southwest Airlines Reports First Quarter Earnings; 64th Consecutive Quarter of Profitability," is reader friendly in some aspects, for example, the quotes coming from the CEO are straight forward and easy to understand. However, there are aspects of this news release that discuss technical company numbers and percentages.

The story found from Forbes titled, "Earnings Preview: Southwest Airlines," clarifies what was stated in the earnings release, explaining that "Southwest, like the overall airline industry, suffered a series of setbacks during the first quarter." That direct quote clarifies what CEO Gary C. Kelly stated, "Although we are gratified to report our 64th consecutive quarter of profitability, it is disappointing to report first quarter economic earnings below year-ago levels." Not earning the profit that Southwest did last year is a setback to the company. The messages do not conflict, both give readers the same idea of what happened with Southwest's latest earnings.

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