In an attempt to enhance shareholders' value,
) announced a 400% hike in quarterly dividend to 4 cents per
share from a penny per share, marking the second increase since
2012. On an annualized basis, the total amount of dividend payout
is expected to reach over $100 million. The dividend will be paid
on Jun 26, to stockholders of record on Jun 5.
BOEING CO (BA): Free Stock Analysis Report
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SOUTHWEST AIR (LUV): Free Stock Analysis
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Additionally, the company also raised its stock repurchase plan
to $1.5 billion from the existing program of $1 billion. As of
May 14, Southwest has bought back about 82 million shares, worth
$725 million, under its previous share repurchase authorization.
Considering the increase in the authorization, the company now
has the authority to buyback an additional $775 million of common
stock, of which $250 million will be repurchased through an
Alongside these announcements, Southwest unveiled an aircraft
purchase order restructuring initiative that is expected to
induce cost savings in the coming five years. The company
switched five orders for
The Boeing Company
) 737-700 into 737-800s and abandoned a set of five purchase
orders of Boeing Next Generation jets each in 2014 and 2015.
The Dallas-based airline is looking forward to possess the new
Boeing 737 MAX-7 after 2019 through 2021. Designed with the
latest CFM International LEAP-1B engines, the Boeing MAX jets are
expected to reduce fuel consumption and lower CO2 emissions by
Between 2014 and 2015, Southwest will buy 10 used Boeing 737-700s
from the low-cost Canadian carrier WestJet for an undisclosed
price. These jets will be used in place of the older Boeing
737-300s and 737-500s that are set to retire in the next few
years, and until the company gets the advanced MAX planes.
Additionally, the company has postponed the purchase of 41
next-generation 737s from 2014 to 2018 and aims to buy 737 MAX
jets beyond 2024.
The amended delivery schedule will work in favor of the company
by trimming its capital expenditure on aircraft orders through
2018 by more than $500 million. The company has also deferred
about $2 billion of potential capital spending on jet deliveries
With this revised delivery structure, Southwest's annual average
capital commitment for aircraft will be approximately $1 billion
to $1.2 billion, through 2024. For 2013 and 2014, the figure is
likely to be around $900 million and $1.2 billion, respectively.
Southwest - which operates along with the likes of
Delta Air Lines Inc.
JetBlue Airways Corporation
) - currently holds a Zacks Rank #2 (Buy).