Southwest Airlines Co. (LUV): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are upgrading our recommendation on Southwest Airlines to Outperform. Several strategies have been adopted by the company to boost revenues and reduce expenses over the next three years. These include fleet restructuring, introduction of international services and capacity management. Integration of AirTran will boost Southwest's operational and financial performance. Winning of slots and expansion of operations from the Reagan and LaGuardia airports will further boost its network presence. Further, the beginning of operations from Dallas Love Field and the construction of a new facility in Houston Hobby airport will boost its international operations. Additionally, the company continues to boost shareholders' return via dividends and share buybacks. Such attempts combined with a healthy financial profile will likely support its future endeavors.

Overview:

Based in Dallas, TX, Southwest Airlines Co. (LUV) is a passenger airline that provides scheduled air transportation in the United States. It primarily provides short-haul, high frequency, point-to-point and low-fare services. Southwest Airlines is a leisure-oriented point-to-point carrier largely in Las Vegas, Chicago (Midway) and Phoenix. The company's point-to-point route structure include services to and from many secondary or downtown airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International, Burbank, Manchester, Oakland, San Jose, Providence, Ft. Lauderdale/Hollywood, and Long Island Islip airports.

Southwest Airlines is one of the world's most profitable low-cost airlines that consistently offers the lowest fares. The company sells frequent flyer credits and related services to companies participating in its Rapid Rewards frequent flyer program, including credit card companies, hotels, telecommunication companies and car rental agencies.

In May 2011, Southwest Airlines completed the acquisition of AirTran Holdings, which now operates as a wholly owned subsidiary under the name AirTran Airways. As of Dec 31, 2013, Southwest Airlines along with AirTran operated 680 Boeing aircraft serving 97 cities in approximately 41 states.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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