Another key point to Southwest Airlines Co. (NYSE:LUV)’s success has been its constant focus on giving the customer top value among domestic carriers. You’ll certainly find a cheaper upfront ticket price if you look around for domestic flights from a small regional carrier like Allegiant Travel Company (NASDAQ:ALGT) or Spirit Airlines Incorporated (NASDAQ:SAVE). Then again, Southwest doesn’t charge for the first two checked bags, whereas Allegiant Travel Company (NASDAQ:ALGT) and Spirit Airlines Incorporated (NASDAQ:SAVE) charge for both each checked bag as well as carry-on bags! Southwest’s keep-it-simple approach and easy-to-understand pricing have been instrumental in winning over passengers.
A step above his peers
In addition to delivering a bottom-line profit year-after-year, Southwest and its CEO, Gary Kelly, have done a great job taking care of its shareholders, its employees, and the communities it operates in.
As my Foolish colleague Dan Caplinger so eloquently put it when Southwest Airlines more than doubled its dividend in June, “Investors shouldn’t get too excited about it.” That would be because it boosted its payout by just a fraction of a penny to exactly $0.01 per quarter. Although its current yield of 0.3% isn’t likely to get any income-seekers’ attention, the simple fact that it can pay a dividend in lieu of highly volatile jet fuel prices is incredibly encouraging. In addition, Southwest repurchased 62 million shares (7.6% of outstanding shares) between 2003 and 2012, which helps add value to existing shareholders.
What you’ll find with Southwest is that its employee benefits are one of the prime reasons people choose to work for the company. On top of letting employees, spouses, and dependent children fly free domestically, Southwest matches employees’ 401(k) contributions dollar-for-dollar up to an amazing 9.3% of their salary, contributes to an annual profit-sharing fund for employees, and allows its employees to purchase Southwest stock at a 10% discount to current market value. Employees can also choose to help each other out by donating to an employee catastrophe fund that helps those Southwest employees affected by natural disasters.
The spirit of giving also extends far beyond personal employee benefits. Southwest, through its annual golf tournaments, has raised $9.7 million for Ronald McDonald Houses, which primarily benefits children and their families. Southwest has also partnered with the USO to provide phone cards to troops overseas so they can call their family and friends back home.
Two thumbs up
I know for a fact that airlines certainly aren’t anywhere near the top of my list when it comes to solid investments, but Gary Kelly and Southwest Airlines have done the impossible by completely bucking that overwhelming negative sentiment. Southwest’s immediate plans involve integrating its AirTran purchase and expanding overseas which should help reinvigorate bottom line growth. Coupled with its simple pricing strategy and focus on hitting underutilized markets while taking good care of its employees who make its success possible, Southwest looks likely to continue flying even higher. I’d say that’s more than ample reason to give Gary Kelly two well-deserved thumbs up.
The article This Is 1 Incredible CEO originally appeared on Fool.com.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Spirit Airlines and recommends Southwest Airlines.
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