Croslen 1

Jeffrey Croslen Professor Friedrich MGNT 3165 October 19, 2010 Southwest Airlines

Croslen 2 Southwest Airlines has recently agreed to buy AirTran Holdings, Inc. These two major companies will have to find an effective way to merge. They have to satisfy current and future customers, employees, and investors. In this paper I will discuss the impact of the acquisition on the employees, customers, and investors of Southwest and AirTran. I will also discuss the organizational changes that are occurring inside of Southwest Airlines. Finally, I will discuss the future plans of Southwest Airlines in regards to their acquisition of AirTran Airways. Southwest Airlines strategy favors that of an organic structure. Southwest Airlines offers differentiated services from those of other airlines. These services separate the airline from their competition. Southwest Airlines does not have an assigned seat policy. Southwest believes that the best way for one to find a seat, is for one to sit where he/she likes. They believe that this approach gets the customer to his/her destination faster (Boarding School). Southwest does not charge their customers change fees bag or fees. Other airlines charge up to $120 for bag fees, while Southwest does not charge a bag fee for the first and second bags checked. Other airlines such as AirTran charge $75 for changes made after purchase. Southwest Airlines is also unique in the fact that they are the only major airline that offers only one class of service (Frequently Asked Questions). Southwest now has the opportunity to expand its customer base because of their acquisition of AirTran. Now even more customers can experience the unique services that Southwest has to offer. Southwest Airlines is also becoming more flexible and innovative. Southwest realizes that they will have to take into effect some of AirTran policies and services in order to make the merge more successful and effective. Southwest plans on merging AirTran A+ Rewards members into their award-winning Rapid Rewards program. Southwest also plans to continue to operate AirTrans Boeing 717s. The airline is also exploring the use of new aircrafts and is in the

Croslen 3 process of installing WiFi on their planes (Frequently Asked Questions). Southwest serves all types of business and leisure customers. WiFi and the Internet is a high commodity at the moment. Other airlines already offer WiFi onboard their flights. In this advanced technology society, customers want to have access to the Internet at all times. Business customers may need to work on projects while onboard. Other customers may need to check sports scores or check on their social media accounts. The addition of WiFi would be a huge step towards advancement for the Southwest Airlines. The addition shows that Southwest understands their present and future customers wants and needs. Southwest Airlines is a large organization with over 35,000 employees but it is moving towards a more organic structure. There is some division of labor but Southwest encourages teamwork and a fun working environment. Southwest divides the company into four different divisions: maintenance, flight, customer, ground and fleet services, and other. Southwest listens to its employees and continues to make improvements to its benefits program for both part time and full time employees. The company offers and encourages its employees to train for career advancement (Southwest Airlines Co. Annual Report 2009). Having been around for many decades, Southwest Airlines is in a maturity stage. Southwest has eliminated some of the mechanistic outcomes that normally result from the maturity stage. The job descriptions are specific and there is some amount of formal control but top management is not overloaded. Employees are encouraged to give input and contribute ideas. Southwest cares about its employees and encourages advancement. It is important that a large company does not become too structured and formalized. The company will become complacent and will not respond to change. Competing companies with less of a formalized structure will begin to provide products and services that customers need and want. The more formalized company will start to

Croslen 4 experience losses and by this point it may be too late for the formalized company to gain its customer base back. This is why Southwest has a fun environment where the structure is not very important. Southwest continues to look for ways to innovate and to separate itself from its competitors. I believe that Southwest Airlines has more of a team structure. Southwest is divided into four separate divisions based on one overall objective. However, all employees are offered a safe, reliable, and a fun place to work. Southwest encourages its employees to be team players (Southwest Airlines Co. Annual Report 2009). Working in teams makes the environment more fun. Everyone gets to know each other because they have the chance to work together. This provides more unity and collaboration in the company. One employee can help another employee out if he/she has a question or has trouble doing something. Employees in a team structure are more friendly and do not have to put up a guard at work. I believe that Southwests organic team structure is appropriate. It would seem that being such a big company that Southwest would have a mechanistic structure. However, Southwest realizes that a mechanistic structure does not provide innovation, teamwork, and a fun environment. Being in the airline industry, Southwest Airlines needs to continue to innovate and separate itself from its counterparts in order to stay ahead. Southwest has a lot of completion in its market. If Southwest was more formalized, the company would fail in todays high technology society. Southwest would not have looked for ways to improve if it had a mechanistic structure. Southwests structure will not change after the acquisition of AirTran. The company will integrate some of AirTrans aircrafts, employees, and ideas. Southwest has already stated that they will bring the cultures of the two companies together. Southwest believes that it must keep its strong culture in order to have a competitive advantage (Frequently Asked Questions).

Croslen 5 Southwests current structure has proven to be very successful. The company continues to be profitable and has won many customer service awards. It will not be hard to integrate AirTran workers since Southwests current structure has proven to be so successful. Southwest has a very strong, fun, diverse, and family oriented culture. Southwest Airlines number one priority is to ensure the personal safety of each Southwest customer and employee. The company also believes in applying the golden rule. The airline believes in living the Southwest way, which is to have a Warrior Spirit, a Servants Heart, and a Fun-LUVing Attitude. Within each of these categories are specific behaviors that help build a safe, profitable, and a fun place to work (Southwest Cares). These characteristics represent Southwests statement of principle. Their basic principles represent those of a family oriented environment. Southwests statements of principle are presented to all employees upon their hiring. The employees understand that these are the fundamental beliefs of the company. Southwest Airlines believes that their culture is important to their success and they want all of their employees to know that. The company also has many heroes who demonstrate the values of the culture. One of those heroes is Herb Kelleher, the former CEO of Southwest Airlines. Kelleher embodied customer first, quality service, and having fun while doing it (Plunkett 284). The company also has a star of the month program. This program shows that employees are being recognized and that they are considered to be an important part of the company. Southwest Airlines slogan, Happy Employees = Happy Customers keeps a fun culture that provides a high level of customer service (Southwest Cares). Southwests culture will continue to stay the same after their acquisition of AirTran. Southwest Airlines plans on merging the cultures of the two companies together. The company wants AirTran employees to feel welcome and to experience a smooth transition. Southwest

Croslen 6 believes that both companies have passionate and resilient people who care about their coworkers and who care about serving customers (Frequently Asked Questions). It should be an easy transition. Both cultures are somewhat similar and Southwests current culture has proven to be very successful. The transition would be much harder if Southwest was not as profitable as AirTran. Southwest Airlines has recently agreed to purchase AirTran. This is an externally motivated change that involves a smaller company being brought out by a bigger, more successful competitor. It is moving at a rate of that of an evolutionary change. The merger is a process and everyone can not immediately conform to Southwests policies. It will take a while for AirTran employees to fully understand and accept Southwests culture and policies. Southwest plans on keeping all of AirTrans current employees and they would like for all of them to feel welcome. The change is in its early stages because no change has taken place yet. There has only been an announcement of the change. The change will not fully go through until the end AirTrans final day of operation. Employees of AirTran may resist the change. They may feel that they are not wanted and that they may be laid off. Southwest plans on overcoming potential resistance by trying to make all AirTran employees feel welcome. The company wants to integrate both cultures and is planning to keep all of AirTrans employees. However, both companies share some of the same ideas so the change will not be as tough. Southwest Airlines has recently acquired Air Tran. The acquisition will affect the employees, customers, and investors of both Southwest and AirTran. The merger will not be immediate nor will it be easy. However, Southwests culture is one that can make the change easier. The companys fun and family oriented culture is one that can make the transition an easy one.

Croslen 7 Works Cited Plunkett, Warren R., Raymond F. Attner and Gemmy S. Allen. Management: Meeting and Exceeding Customer Expectations. Mason, Ohio: South-Western, 2008. Southwest Airlines. Boarding School. 2010. 15 October 2010 <http://www.southwest.com/html/customer-service/faqs.html?topic=boarding_school>. Southwest Airlines. Frequently Asked Questions. 2010. 15 October 2010 <http://www.lowfaresfarther.com/frequently-asked-questions/>. Southwest Airlines. Southwest Airlines Co. Annual Report 2009. 2010. 15 October 2010 <http://216.139.227.101/interactive/luv2009/>. Southwest Airlines. Southwest Cares. 2010. 14 October 2010 <http://www.southwest.com/about_swa/southwest_cares/our_people.html>.