The U.S. air carriers are expanding in-flight entertainment
options and adding novel features to their services in order to
distinguish themselves from their major rivals. Accordingly, the
largest U.S. low-cost carrier
Southwest Airlines Co.
(
LUV
) plans to introduce wireless inflight entertainment services to
its passengers onboard five aircraft.
Initially, the company will offer seven sports and news channels
-- NBC Sports, MLB live games from MLB.com, NFL Network, CNBC,
MSNBC, Fox News and Fox Business New through its onboard WiFi
provider, Row 44. Then, it will gradually expand its offerings to
20 planes by mid-July. Southwest will charge $3-$8 during a trial
period for the live TV service.
The latest facility will be an addition to the company's WiFi
offerings. Southwest is equipped with 250 WiFi
The Boeing Company
(
BA
) 737 jets out of its total 550 planes. The company expects to have
70% of its fleet equipped with WiFi by the end of the next
year.
The move will boost its competitive position against its major
rivals that have already started offering live TV services to their
passengers onboard. One of the leading low-cost airlines
JetBlue Airways Corporation
(
JBLU
) offers 36 channels at no extra fee. The largest U.S.
airline
United Continental Holdings Inc.
(
UAL
) charges $6 for smaller fights say two hours, and $8 for longer
time flights.
The second largest U.S. airline
Delta Air Lines
(
DAL
) is already the world's largest fleet of aircraft to be equipped
with WiFi. The company expects to deploy its WiFi services to the
international flights early next year.
Besides, Southwest is in the midst of a fleet modernization
plan. The company is renovating in-flight cabins and redesigning
interiors. We believe the overall fleet modernization plans will
boost pre-tax income by about $70 million in 2012, $300 million in
2013 and $500 million in 2014.
However, revamping of in-flight cabins and interiors would
increase maintenance expenses by $50 million this year, out of
which $14 million is expected to be incurred in the second
quarter.
We are currently maintaining our long-term Neutral rating on the
stock. For the short term (1-3 months), the stock retains a Zacks #
2 (Buy) Rank.
BOEING CO (BA): Free Stock Analysis Report
DELTA AIR LINES (DAL): Free Stock Analysis
Report
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
Report
SOUTHWEST AIR (LUV): Free Stock Analysis Report
UNITED CONT HLD (UAL): Free Stock Analysis
Report
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