Accounting aspects of Southwestern Airlines

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In 1966 Kelleher was practicing law in San Antonio when a customer named Rollin King wished-for starting a short-haul airline like California-based Pacific Southwest Airlines.The airline would fly the "Golden Triangle" of Houston, Dallas, and San Antonio and by staying within Texas, avoid federal regulations…

Introduction

In 1966 Kelleher was practicing law in San Antonio when a customer named Rollin King wished-for starting a short-haul airline like California-based Pacific Southwest Airlines.The airline would fly the "Golden Triangle" of Houston, Dallas, and San Antonio and by staying within Texas, avoid federal regulations. Kelleher and King formed a company, raised initial capital, and filed for regulatory approval from the Texas Aeronautics Commission. Regrettably, the other Texas-based airlines, namely Braniff, Continental, and Trans Texas, opposed the idea and waged a battle to prevent Southwest from flying. Kelleher argued the company's case before the Texas Supreme Court, which ruled in Southwest's favor. The US Supreme Court refused to hear an appeal filed by the other airlines. In the late 1970s, it looked as if the company could begin flying.''Southwest then began building a management team, and the purchase of three surplus Boeing 737s was negotiated. In the meantime, Braniff and Texas International continued their efforts to put off Southwest from flying. The underwriters of Southwest's initial public stock offering withdrew, and a restraining order against the company was obtained two days before its scheduled inaugural flight. Kelleher again argued his company's case before the Texas Supreme Court, which ruled in Southwest's favor a second time, lifting the restraining order. Southwest Airlines began flying the next day, June 18, 1971' (Freiberg & Freiberg, 1996) ...
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