Southwest Announces Summer Sale - Analyst Blog

By
A A A

As winter bids adieu, low cost carrier, Southwest Airlines ( LUV ) is gearing up for summer travel sales. The carrier has announced discounted fares up to $69.00 on a one way trip that can e availed on 10 days advance booking between April 3 and June 27, 2012. The discounted tickets are available on specific days like Tuesdays and Wednesdays to select destinations.

Southwest remains benefited from the seasonal impact on its business. Summer travel boosted revenue growth last year on higher leisure travel demand. Additionally, load factor also increased reflecting higher occupancy on flights compared with summer 2010. 

However, Southwest's outlook remains lackluster for this year with uncertainties hovering over the macroeconomic environment. According to the International Air Transport Association, global airline passenger growth will be around 4% in this year compared with 6% in 2011. Further, profitability of air carriers are also rated down with an estimated overall profit of $3.5 billion for this year, reflecting a steep decline from $6.9 billion in 2011 and $16 billion in 2010.

Therefore, carriers are banking on discounted airfares to attract passengers. However, the steeply rising fuel prices remain unfavorable for airfares and airlines are left with limited pricing flexibility.  

We believe the peak season revenues remain crucial for Southwest and other carriers like United Continental Holdings Inc. ( UAL ), Delta Air Lines ( DAL ), US Airways Group Inc. ( LCC ) and JetBlue Airways Corporation ( JBLU ) to offset staggering fuel costs and derive substantial benefits by attracting more travelers on discounted tickets.

Currently, we maintain our long-term Neutral recommendation on Southwest supported by a short-term (1-3 months) Zacks #3 (Hold) Rank.


 
DELTA AIR LINES ( DAL ): Free Stock Analysis Report
 
JETBLUE AIRWAYS ( JBLU ): Free Stock Analysis Report
 
US AIRWAYS GRP ( LCC ): Free Stock Analysis Report
 
SOUTHWEST AIR ( LUV ): Free Stock Analysis Report
 
UNITED CONT HLD ( UAL ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



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.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DAL , JBLU , LCC , LUV , UAL

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

91,252,153
  • $13.78 ▼ 4.31%
68,133,496
  • $12.93 ▲ 6.77%
57,268,074
  • $46.13 ▲ 2.47%
43,432,023
  • $105.22 ▲ 0.37%
40,880,685
  • $13.46 ▲ 8.90%
40,712,405
  • $98.62 ▲ 0.82%
39,776,976
  • $16.72 ▲ 0.72%
34,688,871
  • $11.16 ▲ 3.05%
As of 10/24/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com