Southwest to Fly International Airs - Analyst Blog

By Zacks Equity Research,

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Southwest Airlines Co. ( LUV ) will fly beyond national boundaries to three destinations in the Caribbean Island from Jul 1, 2014. Currently, Southwest is the only leading U.S. passenger carrier without international operations.

Dallas-based Southwest has started selling summer tickets for non-stop flights from Atlanta, Baltimore and Orlando in the U.S. to Aruba, Bahamas and Jamaica in the Caribbean. However, the news failed to excite shareholders as the stock ended 1.1% in the red on Monday trade on Nasdaq.

Southwest already operates in Nassau and Montego Bay in the Caribbean, Punta Cana in Dominican Republic and Cancun, Los Cabos and Mexico City in Mexico through AirTran - its wholly owned subsidiary. AirTran will continue to operate in these markets till it gets fully integrated with Southwest by the end of 2014.

Going forward, the carrier plans to add other international destinations from Houston, Fort Lauderdale, Florida and other U.S. cities, but did not divulged details regarding these routes. The company, which uses The Boeing Co. 's ( BA ) 737 series of aircraft, has no plan of adding any bigger versions.

Southwest has come a long way since its formation four decades ago to a top carrier with an expanded national footprint. However, technical glitches on its reservation system had stalled its international expansion plans.

The carrier argued that it wants to target the over-fared international routes, which would boost its performance. We believe that if the company manages to price its tickets attractively, it would grab a significant share in these markets. On the flip side, archrival JetBlue Airways Corp. 's ( JBLU ) increasing presence in these markets is a threat to its operations.

The airline reported robust fourth quarter results with the top and bottom line surpassing their Zacks Consensus Estimate. Passenger revenue per available seat mile - a meaningful airline metric - also increased 4.2% during the quarter. Strong bookings and strategic initiatives taken by management aided the quarter's performance.

Southwest currently carries a Zacks Rank #2 (Buy). Another stock worth considering in the sector includes Zacks Rank #1 (Strong Buy) Spirit Airlines Inc. ( SAVE ).

BOEING CO (BA): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

SOUTHWEST AIR (LUV): Free Stock Analysis Report

SPIRIT AIRLINES (SAVE): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BA , JBLU , LUV , SAVE

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