After operating for several decades within the U.S. domestic
Southwest Airlines Co.
) is finally flying into international territory, with flights to
the Caribbean. The share price gained altitude on the news as the
stock closed 3.24% higher on Tuesday trade on Nasdaq.
As announced in Jan 2014, Southwest Airlines inaugurated
services from Atlanta, Baltimore and Orlando to Oranjestad, Aruba
and Montego Bay, Jamaica. Another flight will fly from the
Baltimore-Washington D.C. area to Nassau and Paradise Island, thus
extending the carrier's international service to the Bahamas.
Dallas-based Southwest Airlines announced that after the initial
round of flights, it will expand its international service to
Cancun and Los Cabos in Mexico starting next month. Flights to
Mexico City and Punta Cana, Dominican Republic will thereafter be
added from Nov 2.
Southwest Airlines already operates flights to Mexico and
Dominican Republic through its wholly owned subsidiary, AirTran.
The airline plans to integrate AirTran with itself by the end of
Southwest Airlines has come a long way since it started
operations four decades ago. Having established itself as a top
carrier with an expanded national footprint, the company now plans
to flag off international flights from nine U.S. cities by the end
of this year.
However, the international service will currently have only a
modest contribution in Southwest Airlines' overall performance. In
this regard, the carrier will naturally lag way behind its larger
Delta Airlines Inc.
American Airlines Group Inc.
United Continental Holdings Inc.
), which boast strong international operations.
Moreover, Southwest Airlines will face considerable completion
from JetBlue, Delta Airlines and American Airlines, who already fly
to the Caribbean. However, we believe the carrier should gain from
its relatively low fares as compared to its traditional rivals.
Though an apparent international expansion, Southwest Airlines
is technically taking over the operations of its subsidiary
AirTran, which flies to the Caribbean. However, Southwest Airlines'
international service is here to stay for good as the carrier plans
to add 50 international routes going forward.
Southwest Airlines currently carries a Zacks Rank #1 (Strong
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