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Overview three years income statements of Southwest Airlines, Delta Air Lines, and Amerrican Airlines

The following financial statements were used in evaluating the efficiency within Southwest and its competitors. The structure of revenues and expenses presents the effectiveness of each year’s financial health and the result of their strategic policies. The information contained in this section was taken from the company’s annual reports, online databases, recent activity and other disclosures. For scaling the years of data available, we will limit the majority of the interpretation using only the previous three accounting years.

The Table H-1, Table H-2 and Table H-3 are the Income Statement of Southwest Airlines Co., Delta Air Lines, Inc., and American Airlines, Inc., which are shown in most recent three fiscal years respectively. These information basically present each company’s result of the operation for each fiscal year, and can be compared with the company itself and each competitor. The following financial charts are in three years and three companies basis, too. From these easily identified graphs and the brief descriptions of the meaning of each financial ratios, readers can understand whether the company is a leader in the market or has significant weakness in each different financial prospect.

 

 

Table H-1 Southwest Airlines, Co. Income Statements (Source Annual Reports)

 

Amounts in ($Thousand)

Period Ending: 12/31/2010 12/31/2009 12/31/2008
Total Revenue $12,104,000 $10,350,000 $11,023,000
Cost of Revenue $9,062,000 $8,069,000 $8,590,000
Gross Profit $3,042,000 $2,281,000 $2,433,000
Operating Expenses      
Sales, General and Admin. $1,426,000 $1,403,000 $1,385,000
Non-Recurring Items $8,000 $0 $0
Other Operating Items $628,000 $616,000 $599,000
Operating Income $988,000 $262,000 $449,000
Add’l income/expense items ($94,000) $67,000 ($66,000)
Earnings Before Interest and Tax $894,000 $329,000 $383,000
Interest Expense $149,000 $165,000 $105,000
Earnings Before Tax $745,000 $164,000 $278,000
Income Tax $286,000 $65,000 $100,000
Net Income-Cont. Operations $459,000 $99,000 $178,000
Net Income $459,000 $99,000 $178,000
Net Income Applicable to Common Shareholders $459,000 $99,000 $178,000

Source: Disclosure SEC Database: Southwest Airlines Co.

 

Table H-2 Delta Air Lines, Inc. Income Statements (Source Annual Reports)

Amounts in ($Thousand)

Period Ending: 12/31/2010 12/31/2009 12/31/2008
Total Revenue $31,755,000 $28,063,000 $22,697,000
Cost of Revenue $17,358,000 $16,643,000 $20,702,000
Gross Profit $14,397,000 $11,420,000 $1,995,000
Operating Expenses      
Sales, General and Admin. $10,219,000 $9,801,000 $616,000
Non-Recurring Items $450,000 $407,000 $8,427,000
Other Operating Items $1,511,000 $1,536,000 $1,266,000
Operating Income $2,217,000 ($324,000) ($8,314,000)
Add’l income/expense items ($640,000) ($376,000) ($22,000)
Earnings Before Interest and Tax $1,577,000 ($700,000) ($8,336,000)
Interest Expense $969,000 $881,000 $705,000
Earnings Before Tax $608,000 ($1,581,000) ($9,041,000)
Income Tax $15,000 ($344,000) ($119,000)
Net Income-Cont. Operations $202,000 ($1,320,000) ($8,922,000)
Net Income $593,000 ($1,237,000) ($8,922,000)
Net Income Applicable to Common Shareholders $593,000 ($1,237,000) ($8,922,000)

Source: Disclosure SEC Database: Delta Air Lines, Inc.

 

Table H-3 American Airlines, Inc. Income Statements (Source Annual Reports)

Amounts in ($Thousand)

Period Ending: 12/31/2010 12/31/2009 12/31/2008
Total Revenue $22,170,000 $19,917,000 $23,766,000
Cost of Revenue $10,217,000 $9,178,000 $19,214,000
Gross Profit $11,953,000 $10,739,000 $4,552,000
Operating Expenses      
Sales, General and Admin. $10,552,000 $10,468,000 $4,021,000
Non-Recurring Items $0 $171,000 $1,213,000
Other Operating Items $1,093,000 $1,104,000 $1,207,000
Operating Income $308,000 ($1,004,000) ($1,889,000)
Add’l income/expense items ($22,000) ($46,000) $541,000
Earnings Before Interest and Tax $286,000 ($1,050,000) ($1,348,000)
Interest Expense $792,000 $702,000 $723,000
Earnings Before Tax ($506,000) ($1,752,000) ($2,071,000)
Income Tax ($35,000) ($284,000) $0
Net Income-Cont. Operations ($471,000) ($1,468,000) ($2,071,000)
Net Income ($471,000) ($1,468,000) ($2,071,000)
Net Income Applicable to Common Shareholders ($471,000) ($1,468,000) ($2,071,000)

Source: Disclosure SEC Database: American Airlines, Inc.

 

The Exhibit H-1 presents the structure of the income statement by using the Common-Size basis. If the Total Sales is one hundred percent, each bar in the chart is consists of the elements of the total sales in each year of each company. If the Net income is shown on the top of the bar, it means the company has net revenue in the year. On the contrary, it would represent the net loss occurred in the year. From Exhibit H-1, we can see that Southwest continuously generated profit from 2008 to 2010, but its competitors’ net incomes are either fewer than Southwest or even has net loss. Southwest has a relative strong operational result in the domestic airlines market. Also, we can tell from the Exhibit H-1 that Cost Revenue and SG&A expense are the main elements in the Airlines industry’s total sales.

 

Exhibit H-1 Three year and three companies’ income statement comparison

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