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Southwest (LUV) Down 6% in Yesterday's Trading: Here's Why
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Southwest Airlines (LUV - Free Report) has been the most affected U.S. airline in terms of flight cancellations due to unfavorable weather conditions. Multiple flights across the United States have been cancelled by airline companies due to a severe winter storm during the Christmas holiday weekend.
Reportedly, LUV cancelled 62% of its flights on Dec 27. This unprecedented disruption in operations resulted in the LUV stock shedding 5.96% of its value on Dec 27.
What is worse is that LUV’s rivals have seen their operations being disrupted at a much lower scale. Other airline majors like Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) cancelled not more than 2% of their flights on Dec 27.
We note that LUV is the biggest carrier serving Buffalo, NY, the hardest-hit urban area by this natural catastrophe. Management has apologized to passengers for the harassments they had to face due to disruption in operations.
The disruption is likely to hit LUV’s fourth-quarter 2022 performance. Detailed results will be out on Jan 26, 2023.
Southwest Airlines’ massive rate of flight cancellations did not go unnoticed. Rather it attracted the attention of the Biden administration. The U.S. Department of Transportation has termed LUV’s flight-cancellation rate as “unacceptable.”
The Department of Transportation intends to investigate whether the cancellations could have been controlled. The investigation will also focus on whether LUV is complying with its customer service plan. Even President Biden has tweeted about the weather-related flight cancellations by U.S. airlines, without mentioning the LUV fiasco separately.
Southwest Airlines aims to operate at a reduced scale over the next few days. In view of LUV’s below-par performance, investors will be eagerly waiting to see when this Dallas-based carrier fully recovers from this disruption.
Zacks Rank & Key Picks
Southwest Airlines currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Airline industry are United Airlines and Delta Air Lines.
United Airlines has a market capitalization of $12.54 billion, presently. On the back of upbeat air-travel demand, UAL was profitable in the third quarter of 2022. The third quarter was the second consecutive profitable quarter at UAL since the onset of the pandemic. Management stated that air-travel demand and pricing are still strong. These factors should boost fourth-quarter results.
UAL has outshined the Zacks Consensus Estimate in two of the last four quarters (missing twice). The average beat is 7.8%. United Airlines flaunts a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Delta has a market capitalization of $21.26 billion, presently. DAL, based in Atlanta, GA, is being bolstered by the uptick in demand for air travel (particularly for leisure). Driven by upbeat air-travel demand, Delta expects fourth-quarter 2022 operating margin to be 11%, top of the previously guided 9-11% range. DAL now expects adjusted earnings per share in the $1.35-$1.40 range (the earlier outlook was in the range of $1-$1.25 per share). Total revenues are now likely to increase in the 7-8% range from fourth-quarter 2019 actuals (the earlier outlook was for an increase in the 5-9% range).
Delta’s earnings outshined the Zacks Consensus Estimate in two of the last four quarters (missing twice). The average beat is 7.9%. DAL carries a Zacks Rank #2 (Buy), currently.
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Southwest (LUV) Down 6% in Yesterday's Trading: Here's Why
Southwest Airlines (LUV - Free Report) has been the most affected U.S. airline in terms of flight cancellations due to unfavorable weather conditions. Multiple flights across the United States have been cancelled by airline companies due to a severe winter storm during the Christmas holiday weekend.
Reportedly, LUV cancelled 62% of its flights on Dec 27. This unprecedented disruption in operations resulted in the LUV stock shedding 5.96% of its value on Dec 27.
What is worse is that LUV’s rivals have seen their operations being disrupted at a much lower scale. Other airline majors like Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) cancelled not more than 2% of their flights on Dec 27.
We note that LUV is the biggest carrier serving Buffalo, NY, the hardest-hit urban area by this natural catastrophe. Management has apologized to passengers for the harassments they had to face due to disruption in operations.
The disruption is likely to hit LUV’s fourth-quarter 2022 performance. Detailed results will be out on Jan 26, 2023.
Southwest Airlines’ massive rate of flight cancellations did not go unnoticed. Rather it attracted the attention of the Biden administration. The U.S. Department of Transportation has termed LUV’s flight-cancellation rate as “unacceptable.”
The Department of Transportation intends to investigate whether the cancellations could have been controlled. The investigation will also focus on whether LUV is complying with its customer service plan. Even President Biden has tweeted about the weather-related flight cancellations by U.S. airlines, without mentioning the LUV fiasco separately.
Southwest Airlines aims to operate at a reduced scale over the next few days. In view of LUV’s below-par performance, investors will be eagerly waiting to see when this Dallas-based carrier fully recovers from this disruption.
Zacks Rank & Key Picks
Southwest Airlines currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Airline industry are United Airlines and Delta Air Lines.
United Airlines has a market capitalization of $12.54 billion, presently. On the back of upbeat air-travel demand, UAL was profitable in the third quarter of 2022. The third quarter was the second consecutive profitable quarter at UAL since the onset of the pandemic. Management stated that air-travel demand and pricing are still strong. These factors should boost fourth-quarter results.
UAL has outshined the Zacks Consensus Estimate in two of the last four quarters (missing twice). The average beat is 7.8%. United Airlines flaunts a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Delta has a market capitalization of $21.26 billion, presently. DAL, based in Atlanta, GA, is being bolstered by the uptick in demand for air travel (particularly for leisure). Driven by upbeat air-travel demand, Delta expects fourth-quarter 2022 operating margin to be 11%, top of the previously guided 9-11% range. DAL now expects adjusted earnings per share in the $1.35-$1.40 range (the earlier outlook was in the range of $1-$1.25 per share). Total revenues are now likely to increase in the 7-8% range from fourth-quarter 2019 actuals (the earlier outlook was for an increase in the 5-9% range).
Delta’s earnings outshined the Zacks Consensus Estimate in two of the last four quarters (missing twice). The average beat is 7.9%. DAL carries a Zacks Rank #2 (Buy), currently.