We are maintaining our Neutral recommendation on Southwest
Airlines. The company reported impressive fourth quarter results
beating the Zacks Consensus Estimate on top and bottom lines.
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, increased ancillary product offerings and capacity
management. Integration of AirTran will boost Southwest's
operational and financial performance. Additionally, a healthy
financial profile will likely support its future endeavors.
However, a highly competitive environment and regulations imposed
by the federal authority pose major impediments to its performance.
Further, an expected increase in non-fuel costs and high
integration cost can affect the company's bottom line going
Based in Dallas, Texas, Southwest Airlines Co. 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 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
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 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 along with
AirTran operated 680 Boeing aircraft serving 97 cities in
approximately 41 states.
Southwest Airlines Co. (LUV) (LUV): Read the Full
SOUTHWEST AIR (LUV): Free Stock Analysis Report
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