Leading U.S. passenger carrier
Southwest Airlines Co.
) is eyeing those markets in which rival carriers have downsized
their operations. Southwest wants to tap opportunities in these
markets by leveraging from its recent slot pair wins in New York
and Washington D.C.
The Dallas-based carrier is targeting Memphis, Tennessee,
Delta Airlines Inc.
) trimmed operations last year. Also on Southwest's list is the
Midwestern city of Cleveland which
United Continental Holdings Inc.
) no longer wants as its hub. Despite being small markets,
Southwest is encouraged by the growth opportunities that these
offer. We expect Southwest - known for its low fares - will get a
strong foothold in these markets with competitive ticket
Such a practise is not new for Southwest, as the carrier has
previously benefited by scaling its operations in the city of
Nashville in the 1990s and in St Louis, Missouri, where the
erstwhile American Airlines had downsized its service.
The last few months have been really fruitful for Southwest.
In Dec 2013, Southwest acquired 22 take-off and landing slots at
New York's La Guardia airport (LGA) and recently won bids to
purchase 27 take-off and landing slots at Reagan National Airport
(DCA) in Washington. The slot purchase is part of a mega merger
deal between American Airlines and U.S. Airways Group that led to
the formation of
American Airlines Group Inc.
The company has decided to add flights to Nashville, Texas,
Chicago and Ohio from LGA and expects to expand its operations to
large and mid-sized cities from DCA. Apart from slot purchases,
the company delivered a stellar fourth quarter of 2013, beating
the Zacks Consensus Estimate on both lines.
These positives were, supported by the company's announcement
that it will operate non-stop flights from Dallas starting Oct
13, when the Wright Amendment act is lifted. Additionally, the
major passenger carrier has also decided to fly beyond national
boundaries to three destinations in the Caribbean Island from Jul
2014. It is thus an encouraging time for both Southwest investors
Southwest sports a Zacks Rank #1 (Strong Buy).
AMER AIRLINES (AAL): Free Stock Analysis
DELTA AIR LINES (DAL): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
UNITED CONT HLD (UAL): Free Stock Analysis
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