infonet-economy

When risk mitigation fails, a company is often faced with one or more crisis events. Crisis can take many forms. A type of crisis, a smoldering crisis, can continue gaining momentum over time, slowly eroding the future success of an organization. This paper uses archival case analysis to look at how two airlines — Southwest Airlines and US Airways — responded to the smoldering crisis of loss of profitability and ridership in their short - haul mar kets over the period from the early 1990s to mid - 2000s. These two companies made very different responses to the smoldering crisis, with US Airways choosing a structural response, triggering a cascade of smoldering and acute crisis, while Southwest emphas ized executional strategic adjustments that allowed it to maintain profitability as it transitioned to new operating conditions.