Running head: THE SOUTHWEST AIRLINES

The Southwest Airlines

Institution

Date
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The Southwest Airlines

Risk refers to the threat or probability of injury, damage, loss, liability, or any other

occurrence that is likely to have devastating effects that are caused by either internal or external

vulnerabilities or both. These threats or probabilities can be avoided by applying preemptive

actions. Furthermore, risk can also mean the probability of occurring a lower actual return on

investment as opposed to the expectations (Weiss, Friesen & Weiss, 2017). The later form of risk

can be referred to as financial risk. It is subdivided into various categories. These subdivisions

entail capital risk, default risk, operations risk, payment system risk, refinancing risk, settlement

risk, sovereign risk, exchange rate risk among many others. On the other hand, uncertainty is the

degree of the extent of available choices, or the outcomes of the potential alternatives are free

from constraints. Furthermore, uncertainty may mean a situation in which the current state of

know-how presents no clear information regarding nature or order of things or the

unpredictability of the consequences of the certain magnitude of circumstances.

Southwest Airlines are known to run their planes hard. It is said that this company is the

leading in a number of short hops and trips made by the planes in the united states of America

per day. As a result, the company experiences increased wear and tear on parts of their planes

including engines. The day after the occurrence of the accident that resulted in the death of the

passengers, the company accepted the full responsibility of taking care of the victims and the

casualties of the accident. The company agreed to fund any financial needs of the passengers

who were on the plane a tune of $5,000 for each passenger. In addition, the Southwest Airlines

promised to offer travel vouchers worth $1,000 to each passenger (Weiss, Friesen & Weiss,

2017). This decision was meant to lift confidence levels among the customers of this company

thus retaining them.

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Going forward, Southwest Airlines needs to consider more advanced strategies in

managing the risks and uncertainties that may arise in the course of their operation. For instance,

the high levels of wear and tear need to be handled in a more serious manner. The company

needs to device a way of conducting frequent repair and maintenance exercises in the course of

their operation. Further, the Southwest Airlines require to devise means of maximizing their

profits in a way that they are able to survive in an occurrence of the worst-case scenario.

One big issue that the Southwest Airlines seem to be having a hard time making a

decision about is the need to inspect jet-engine inspection. The airline came up with opposition

to the recommendations of the engine manufacturer that required that ultrasonic inspection of the

blades of the fans to be carried out within a 12 months’ period (Weiss, Friesen & Weiss, 2017).

The company raised issues of the need for more time to be able to carry out an inspection on all

of its engines. However, it was not willing to conduct this inspection on all of its engines.

Therefore, its concerns entailed wanting to reach a comprise regarding the number of the engines

that the manufacturer should allow to be put under inspection.

However, when the Federal Aviation Administration declared a mandatory inspection,

Southwest Airlines claimed it had already started the inspection process (Cote, 2018). In

contrary, after the occurrence of the accident that resulted in the death of one passenger, it was

discovered that the blade that brought about the accident had signs of metal fatigue. These

fatigue signs included the microscopic cracks that were as a result of the repeated use. Thus, it is

clear that the accident that led to the death of one of the passengers of the Southwest Airlines

was as a result of the negligence and giving less consideration to the value of the customers to

the company.
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The continued negligence by the Southwest Airlines on the inspection of their planes

poses a greater risk of impacting negatively on the transactions of the company (Cote, 2018).

When this situation is left unchecked, it has the potential of keeping people away from using this

airline. Consequently, there will result in a reduction in the income of the company. Eventually,

the company will go to its knees. Thus, to avoid such an ordeal, the management of the

Southwest Airlines need to run with speed to check into such issues as the inspection of the

planes’ engines as directed by the manufacturer. The airline also needs to take full responsibility

for their mistakes. In a case where there occurs casualties or injuries that result from an accident

caused by the negligence of the company, the victims and their families (for the deceased) need

to enjoy full support from the company. This move may help to instill trust among the potential

customers.

Concerning the moral problem, the Southwest Airlines has committed several safety

violations. Among these violations entail flying planes that lack required repairs. However, the

perpetrators of these moral offenses have never gone unpunished. Beginning with the Southwest

Airlines company as a whole, it has encountered various fines imposed by the government

institutions regarding their violation of the various safety measures. On the other hand, the

Southwest Airlines has taken initiatives to impose punishment on the individual perpetrators of

these offenses. One key measure taken by the Southwest Airliners company is to make sure that

all those who were agents of disciplinary actions lose their jobs. As a result, about 468 people

were laid off from their jobs. This number represented about 17 percent of the total employees of

the Southwest Airliners.

The principal-agent problem of the Southwest Airlines company is its belief that it ought

to first satisfy its employees who in turn satisfy the customers of the company (Campbell, 2015).
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Thus, Southwest Airlines never attempts to sacrifice its happy employees in an attempt to satisfy

its customers. Therefore, the southwest company believes in trusting its employees since the

customers sometimes have the tendencies of being wrong. Therefore, the Southwest Airlines

employs several strategies in trying to implement this belief.

Firstly, Southwest Airlines hires inexperienced workers to function in the internship

capacity so that they can have an opportunity of learning from the experienced employees. In this

period of internship, an inexperienced worker finds the opportunity to observe the importance of

the culture of the southwest through the means of demonstrations by the experienced personnel

(Campbell, 2015). Further, the Southwest company trains the employees to entrust colleagues

from different departments with their work. This strategy helps the employees of a different

department to appreciate the challenges that their colleagues from a different department

undergo. Thus, it helps to create empathy and cooperation among the employees.

Furthermore, the Southwest strives to encourage the spirit of a family as opposed to a

company among its employees. Thus, every employee handles the next one as a member of a big

family. The perfect example of the family-hood is expressed through the sharing of the profits. In

addition, the company promotes celebrations (Cameron, 2017). These celebrations range from

the company issues to issues relating to the individual employees. Thus, these celebrations play a

more significant role in helping the employees to bond with one another. Therefore, it is possible

even for the top management to know the affairs of the junior employees.

The Southwest Airlines gives equal opportunity to the employees to be creative and

exercise their variant personalities (Cameron, 2017). The originality of the employees regarding

clothing, interesting broadcasting, conversation, among other things helps to bring about a

relaxing and delightful atmosphere. This environment has a positive impact on the passengers
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who aboard the planes of this company as it helps in relieving their pressure and stress. Thus, the

Southwest Airlines company endeavors to break any wall that may hinder effective delivery of

their services.

Southwest Airlines employs a flat organization structure. It has a lean structure besides

making use of the informal code of conduct. Thus, this structure helps to enhance cross-

functional communication due to its leanness. Consequently, it is easier for the employees to

meet with the managers and even the president of the company in a case when they want to

deliver suggestions and or opinions. Thereby, this simplicity in the hierarchy of this organization

enables the supervisors to have an ample time while managing the employees (Alamdari &

Fagan, 2017).

Further, it also allows for the management and the employees to maintain direct and good

communication. Hence, the top management is accessible by any employee within the

organization for discussion about anything at their time of preference. Thus, this form of the

organization structure plays a bigger role in helping the employees of the Southwest Airlines to

fully exploit their potential and improve their skills with any pressure and or restrictions.

The organization structure of the Southwest Airlines company is arguably one of the best

in the market. It offers opportunities for improvement and self-discovery among the employees

(Alamdari & Fagan, 2017). Furthermore, the entire staff has a deeper understanding of how the

company makes its income. Hence, every employee can assess their job security concerning the

financial state of the company. This openness nature of the organization of the Southwest

Airlines serves as a motivator among the large percentage of the employees and thus rekindles

the desire for them to maximize their efforts in trying to maximize the profits towards the

company. However, this organization structure stands a chance of according overly freedom to
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the employees. Thus, there is a need for embracing moderation mechanisms for purposes of

avoiding to risk major company confidential information. Thus, there ought to be some

restriction regarding the relationship between the top-most management of the company and the

junior employees. However, this change should not be so extreme that the employees will start

becoming suspicious of something strange happening.

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References

Alamdari, F., & Fagan, S. (2017). Impact of the adherence to the original low-cost model on the

profitability of low-cost airlines. In Low-Cost Carriers (pp. 73-88). Routledge.

Cameron, K. (2017). How Southwest Airlines challenged a global crisis. The Business &

Management Collection.

Campbell, J. L. (2015). The fair value of cash flow hedges, future profitability, and stock returns.

Contemporary Accounting Research, 32(1), 243-279.

Cote, R. (2018). Leadership Analysis: Southwest Airlines-Herb Kelleher, CEO. Journal of

Leadership, Accountability & Ethics, 15(1).

Weiss, E. N., Friesen, M., & Weiss, E. N. (2017). Southwest Airlines: Singin' the (Jet) Blues.

Darden Business Publishing Cases, 1-16.