This article is from WeChat public account:Positive Solutions (ID:zhengjieclub), original title: “The most profitable in the United States The airline, Buffett wants to buy it: let the plane be as cheap as a bus. The title map is from: Oriental IC
In the “years of millions, per capita 985”, there is a problem that is very dazzling: One billion people in China have not been on the plane.
Although this data is not directly statistic, the credibility is not low, and many people have publicly quoted it.
In 2012, Chairman of the Eastern Airlines Liu Shaoyong said that “3/4 of the Chinese did not take the plane.” In that year, China’s population was about 1.35 billion, multiplied by 3/4, which was 1.0125 billion.
This year, Luo Yonghao even declared a high-profile claim that there are still 1 billion people in China who have not been on a plane, and therefore planned the “Hundreds of Return Tickets after the Festival”.
The economist Li Xunlei’s answer in the article “How many people in China have not been on the plane – to explore the path of expanding domestic demand” is also 1 billion.
In fact, if you think about it, it’s not a shocking thing that 1 billion people haven’t taken the plane.
After all, the ticket price is not low, and the applicable crowd is mostly for business people.
Take Beijing to Shanghai, there are 44 high-speed trains every day, the second-class seat of the high-speed rail is 553, the choice of motor train is 269, if you take the ordinary train, you only need to spend more than 170 yuan.
Although the plane has long since declined between Beijing and Shanghai, it still needs eight or nine hundred. If the time is better, the flight will cost more than 1,000.
Accounting for taxes and fees, the ticket is still much more expensive than the high-speed rail.
(composition of Chinese passenger traffic in 2017)
However, there is an airline in the United States, known as the “air bus”, which not only allows more Americans to enjoy fast and cheap flight attendants, but also creates a precedent for low-cost airlines, and is still in the fierce American aviation industry. Out of the box, it has achieved great commercial success.
Even the “stock god” Buffett wants to buy this airline.
1. Different airlines
First look at a picture.
(Unit: billions of dollars)
This is part of the financial performance of the four major US airlines in 2018: American Airlines, United Continent, Delta Air Lines, and Southwest Airlines. It is not difficult to find from the figure that D and A, B and C are not a heavyweight in terms of operating income, total assets and total liabilities.
If the top three belong to the level of Ali and Tencent, then D is probably only comparable to Xiaomi and Haier.
Next, let’s look at another picture, or some financial indicators of the four major airlines, but this time it is replaced by operating profit, net profit, and net operating cash flow.
(Unit: billions of dollars)
From the figure, we can find that the original body quantity is only half of the top three, and it ranks second in terms of operating profit and net profit. As for the net value of operating cash flow, it also exceeds A, reflecting the soundness of its operations.
For readers who have an understanding of the US aviation industry, it should be easy to guess that A, B, and C are American Airlines, United Continent, and Delta Air Lines, and D is Southwest Airlines. One is particularly different in American aviation history. Airlines.
This company started in the sunset of the American aviation industry and was under the turmoil of aviation history.
It can’t be compared with the old aviation giants, both in history and in volume.
But most people think that it is the most profitable airline in the United States.
(data deadline: November 7, 2019)
From the stock market that best reflects the company’s operations, we can see that Southwest Airlines is unique. In addition to the large volume gap, the market value is slightly lower than Delta Air Lines, Southwest Airlines in the price-earnings ratio is still far ahead of the top three, the price-to-book ratio is also very stable, investors can see its love and optimistic.
Buffett is the second largest shareholder of Southwest Airlines. In February of this year, there were rumors in the market that Buffett wanted to acquire the remaining shares of Southwest Airlines at a price of $75 per share, a premium of 30% to 40%.
(Buffy Hill Hathaway, a Buffett company, is the second largest shareholder of Southwest Airlines)
In fact, Southwest Airlines is really qualified to be so optimistic. This alternative aviation, which started late and has a thin foundation, can achieve such great achievements. In the final analysis, there are only five words:
Do not take the usual path.
2. Earn and save
In 1967, Southwest Airlines was established and changed its name to 1971.
At the time, many people were not optimistic about this company. On the one hand, the American aviation market when Southwest Airlines was founded is alreadyStrong enemies around. Established in the 1920s and 1930s, established airlines such as United Airlines, Delta Air Lines, and American Airlines not only have mature business models and stable customer sources, but also master the major routes of major cities. The aviation industry has stepped into the era of stock competition.
On the other hand, since the 1970s, the days of American Airlines have been bumpy, the Arab oil embargo of 1973, and the soaring oil prices between 1979 and 1980, all to airlines. Brought huge cost pressures.
The basis of these people may be no problem, but they all ignore the strong vitality of Southwest Airlines itself.
(Southwest Airlines is based in Dallas)
It is in the aviation industry that has gone downhill that Southwest Airlines has grown from a small local company with only $560,000 and three Boeing 737s to a large company. At present, there are more than 750 in-service aircraft, with more than 3,800 flights per day and nearly 60,000 employees.
More critically, Southwest Airlines has been profitable since its sixth year of existence, in 1973, and has been in business for 46 years.
Even if it is in 1990-In the context of the Gulf War in the context of the Gulf War in 1994, the US aviation industry fell into a quagmire after the 9/11 attacks. Under the bankruptcy of the subprime mortgage crisis in 2008, Southwest Airlines was also profitable and growing, creating aviation history. Miracle.
Southwest Airlines has achieved such great achievements, and one of its titles can be seen in one or two: Airbus.
Under normal circumstances, if you miss a flight of Southwest Airlines, you can take your next flight in an hour and go to your destination. This is for the American commuters who travel in small and medium cities. It is a huge gospel.
(Southwest Airlines seized the route between small and medium cities)
Moreover, when you take Southwest Airlines, you don’t need to be seated at all. Passengers can sit close to the bus, which further enhances passengers’ favor for Southwest Airlines.
Another meaning of the air bus is that Southwest Airlines’ routes are mainly short-haul. Most of the old airlines consider the short-haul route with high unit cost and thin profit, which can replace many vehicles and is very disgusting to this market. So, Southwest Airlines chose short-haul routes, which undoubtedly avoided the direct competition of the majors.
Southwest Airlines Chairman Kellerh once said: We are competing with cars, not airplanes. We are lowering our prices so that we can compete with Ford, Chrysler, GM, Toyota and Nissan. Passenger traffic is already there, it is on land, we pull it up from the highway and put it on the plane.
(Southwest Airlines Chairman and Co-founder Kellerh)
There was data statistics, 90% of the price war in the US aviation industry was initiated by Southwest Airlines.
Like more than a decade ago, Southwest Airlines had $56 from Nashville to New Orleans, while other airlines cost $100 or more.
(Southwest Airlines’ recent offers, the lowest fare is $49)
Many people think that the mode of Southwest Airlines’ “air bus” is tantamount to digging their own graves, because this market is too low-profit, and may even be unable to make ends meet. But soon they were beaten:
Southwest Airlines quickly grew to become the most profitable airline in the United States on the premise of low fares.
All this is inseparable from another approach of Southwest Airlines – low cost operations. Low price does not mean low profit or loss, provided that low cost is supported.
First, Southwest Airlines actively uses small airports, which saves them a large airport usage fee compared to regular airlines.
Second, Southwest Airlines is very practical. Their aircraft models are only Boeing 737, which is not only easy to maintain and deploy by engineers, mechanics, etc., but also reduces employee expenses. Because of the amount when buying an airplaneGreat to get a discount.
(Southwest Airlines, which operates efficiently)
Of course, like some small details: boarding passes are made of plastic and can be recycled; don’t provide meals for free, you can pay for it if you need it; point-to-point flight, no transfer station, Extending the service life of the aircraft… has played a significant role in reducing the cost of Southwest Airlines.
3. People-oriented
A company with a slogan is hard to really retain talent, and it is difficult for employees to have a continuous satisfaction.
The salary of Southwest Airlines employees is not top-notch among major airlines, and can even be said to be the bottom.
However, Southwest Airlines employees are ahead of the rest of the airlines in terms of loyalty and satisfaction.
(Southwest Airlines with a lot of money)
The reason behind this is that Southwest Airlines values and respects employees. This is what the major airlines lack.
(JD Power’s Corporate Satisfaction Survey)
The reason behind this, On the one hand, Southwest Airlines’ lower fare attracts a large number of fixed users, and on the other hand, because it’s a happy employee from the company, it will bring this happiness. To the passengers, thus forming a virtuous circle.
4. Conclusion
Finding the vents and being a flying pig is the deepest instinct of most investors and entrepreneurs. However, there is no absolute vent in this world. Even if there is, this kind of vent will never last. At most, it is a trick to see people and harvest leeks.
The rise of the traditional industry has created a miracle in the history of aviation. The success of Southwest Airlines shows us:
It’s not as good as chasing the wind, it’s better to find another way in the industry that you can see, seize the market’s demand points, and do a good job in the enterprise.
Even if the industry is already in the sunset industry, there will be an adventure of dead trees.
This article is from WeChat public account:Positive Solutions (ID:zhengjieclub) , the original title: “The most profitable airline in the United States, Buffett wants to buy it: make it as cheap as a bus”