Archive for 'Southwest Airlines'

Is Southwest Worth Holding?

Southwest hasn’t exactly had a stellar performance record so far this year and so of it can be attributed to the cancellations because of the hurricanes this year. They’re about to release their earnings report for the third quarter in a couple days and the expectations are some what muted.

Southwest Airlines Co. (LUV) is scheduled to report third-quarter 2017 results on Oct 26, before the market opens.

In the second quarter of 2017, the carrier’s earnings per share (on an adjusted basis) of $1.24 surpassed the Zacks Consensus Estimate of $1.20. The bottom line also improved 4.2% on a year-over-year basis. Operating revenues of $5,744 million was marginally above the Zacks Consensus Estimate of $5,733.2 million.

However, this Dallas-based low-cost carrier is likely to face turbulence in the to-be-reported quarter. The company’s third-quarter results are expected to be hurt due to the recent hurricanes (Harvey, Irma and Maria) and the earthquake in Mexico. These natural disasters have forced the airline to cancel approximately 5,000 flights. Markedly, the negative sentiment surrounding the stock can be gauged from the fact that the Zacks Consensus Estimate for third-quarter earnings has moved down 22.3% over the last 90 days.

Consequently, the stock has struggled so far this year underperforming the Zacks Airline industry  over the last six months. Shares of Southwest Airlines have gained 5.1% compared with the industry’s rally of 5.9%.

Let’s delve deep to find out the factors likely to impact Southwest Airlines’ third-quarter results.

Owing to the multiple flight cancellations, the company expects third-quarter operating revenues are likely to be hurt to the tune of $100 million. Moreover, the carrier expects operating revenue per available seat mile (RASM) in the quarter to be flat to down 1% year over year. The Zacks Consensus

Estimate for third-quarter passenger unit revenues is pegged at 12.33 cents, lower than 13.03 cents reported in the second quarter of 2017.

Increased costs (fuel and labor) are expected to hurt the bottom line. Cost per available seat miles, excluding special items, is estimated to increase between 3% and 4%. Fuel price per gallon is anticipated between $2.00 and $2.05 in the quarter. The Zacks Consensus Estimate for third-quarter fuel price is pegged at $2.00 per gallon, higher than $1.93 reported in the second quarter of 2017.

Apart from Southwest Airlines other carriers like American Airlines Group (AAL – Free Report) and JetBlue Airways (JBLU – Free Report) are also likely to be hurt by the natural calamities.

We are, however, appreciative of the company’s efforts to enhance its shareholders‘ wealth through dividends and share buybacks. At its annual meeting of shareholders, Southwest Airlines announced that its board of directors approved a new share repurchase program worth $2 billion. Notably, share repurchases benefit a company’s earnings per share by lowering outstanding share count.

What Does Our Model Say?

Our quantitative model does not conclusively show an earnings beat for Southwest Airlines in this quarter. This is because a stock needs to have combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise. However, this is not the case as highlighted below.

Zacks ESP: Southwest Airlines has an Earnings ESP of -0.61%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Southwest Airlines’ Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Transportation Gem

With Southwest Airlines likely to disappoint, investors interested in the broader transportation sector may consider Norfolk Southern Corporation (NSC – Free Report) as our model shows that it possesses the right combination of elements to post an earnings beat in the current reporting cycle.

Norfolk Southern has an Earnings ESP of +0.59% and a Zacks Rank #3. The company is slated to release its third-quarter 2017 results on Oct 25.

More on Southwest here


Southwest (NYSE: LUV) Committed to AirTran Deal

Southwest Committed to AirTran Deal

Southwest Committed to AirTran Deal-Image via Wikipedia

Southwest’s Bob Jordan Expected to Guide AirTran Through Integration with Southwest Airlines

Southwest Airlines (NYSE: LUV) said today it intends to close on its transaction to acquire AirTran Holdings, Inc. (NYSE: AAI), on May 2, 2011.  Upon close, Southwest also said it anticipates that Bob Jordan, Southwest’s Executive Vice President Strategy and Planning, will be appointed as President of AirTran Airways to help guide AirTran through its integration with Southwest.

For a photo and bio of Bob Jordan, please click here:

“With the overwhelming approval of AirTran stockholders in March, we are ready to move forward with closing the transaction, now planned for May 2nd,” said Gary Kelly, Southwest’s Chairman, President, and CEO. “We anticipate that all necessary regulatory approvals will be obtained by that date.  We look forward to that milestone day, first and foremost, so that we can begin the exciting work to integrate AirTran into Southwest, and welcome the AirTran Crew Members fully into the Southwest Family.”

Upon close, Jordan would continue reporting to Kelly, and maintain his current responsibilities for Southwest’s Technology, Finance, Internal Audit, and Corporate Planning Departments, while leading AirTran through the transition period until full integration with Southwest is achieved in 2013.

Jordan will continue to serve on the joint Integration Board consisting of Gary Kelly, Bob Fornaro (AirTran CEO), Mike Van de Ven (Southwest Executive Vice President & Chief Operating Officer), Loral Blinde (AirTran Senior Vice President Human Resources and Administration), and Jeff Lamb (Southwest Senior Vice President Administration & Chief People Officer).  The Integration Board will continue to provide overall direction of the integration efforts.  This structure, along with the Integration Leadership roles that Lamb and Blinde have, will continue after closing of the transaction.  Bob Fornaro, after the transaction close, will move to a new role as a full-time consultant for the integration of the two airlines, working closely with Kelly and Jordan to ensure a smooth transition.

Until a single operating certificate is achieved as expected in 2012, AirTran operational Departments will continue their existing reporting relationships under the Leadership of Klaus Goersch, AirTran’s Executive Vice President Operations and Customer Service.  Goersch would report directly to Jordan, and he would work closely with Van de Ven, who would assume the overall Leadership for the operations of both airlines.

The remainder of the organizational structure for AirTran will be refined over the next few weeks and communicated after the transaction closes.

On September 27, 2010, Southwest Airlines announced that it entered into a definitive agreement to acquire all of the outstanding common stock of AirTran for a combination of cash and Southwest Airlines’ common stock. Southwest has said the combination with AirTran will serve more than 100 destinations, including four new airports added by the carriers in 2011. It estimates that this will generate hundreds of millions in annual savings for consumers. These fare savings will result from expanding the well-known “Southwest Effect” of reducing fares and stimulating passenger traffic wherever Southwest flies.

About Southwest Airlines

In its 40th year of service, Southwest Airlines continues to differentiate itself from other low-fare carriers–offering a reliable product with exemplary Customer Service. Southwest Airlines is the nation’s largest carrier in terms of originating domestic passengers boarded, now serving 72 cities in 37 states with the addition of service to Newark Liberty International Airport on March 27, 2011. Southwest also is one of the most honored airlines in the world known for its commitment to the triple bottom line of Performance, People, and Planet. To read more about how Southwest is doing its part to be a good citizen, visit to read the Southwest Airlines One Report(TM). Based in Dallas, Southwest currently operates more than 3,400 flights a day and has nearly 35,000 Employees systemwide.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains forward-looking statements related to Southwest’s anticipated acquisition of AirTran Holdings, Inc. (“AirTran”). Specific forward-looking statements relate to Southwest’s plans and expectations with respect to timing and integration matters.  These forward-looking statements are based on Southwest’s current beliefs, intent, and expectations, and are not guarantees of future performance or results. These statements therefore involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them.  Factors include, among others, the possibility that the transaction is delayed or does not close, including due to the failure of closing conditions. Additional information concerning the risks associated with Southwest’s anticipated acquisition of AirTran is included under the heading “Risk Factors” in Southwest’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and in Southwest’s registration statement on Form S-4 filed with the SEC that includes a proxy statement of AirTran that also constitutes a prospectus of Southwest.

The Greenville Area Development Corporation announced today that 2010 had been another exceptionally strong year for job growth, capital investment, tax revenue generation and private sector support, with hundreds of  millions of dollars invested, thousands of new jobs created, and a 7-to-1 return on investment during the economic development organization’s inaugural decade.

In reporting to a record-setting attendance of private and public sector leaders, Board Chair Jo Watson Hackl noted that in 2010 the GADC worked with nearly two dozen relocating and existing companies to create 2,083 new jobs and attract new capital investment of $251.9 million. Since inception in mid-2001, the GADC has announced in excess of 12,000 new jobs and $2.3 billion in capital investment in the county for projects they have managed.

Greenville County revenues from fee-in-lieu-of-tax agreements generated by GADC-assisted companies continued to grow, with GADC President & CEO Jerry Howard noting that such revenues were cumulatively producing a 7:1 return on investment for public dollars invested in the organization since the GADC’s inception.

Robert M. (Bobby) Hitt III, the recently appointed Secretary of the South Carolina Department of Commerce, saluted the historical job- and investment-producing accomplishments of the GADC and its partners in economic development, and promised a “vigorous effort at the state level to help create even more good jobs and a brighter future for South Carolina.”

CEO Howard and Board Chair Hackl also honored Nancy Whitworth, economic development director for the City of Greenville, SC with the organization’s annual William D. Workman III Award, presented since 2004 to an individual or organization who is a champion of economic development, and a standard bearer for public/private collaboration in marketing the community.

Ms. Whitworth currently oversees, promotes and supports business recruitment and retention initiatives, downtown development and revitalization of commercial areas and neighborhoods for The City of Greenville, and has assisted the GADC in dozens of significant economic development projects including the recruitment of Southwest Airlines, Lab21, Proterra, Sage Automotive Interiors and more.

“Ms. Whitworth has gone above and beyond the call of duty in helping ensure that positive economic growth – and the good jobs and millions of dollars in economic contribution and taxes that go with them – are situated in Greenville,” said Howard.

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CONTACT: Sam Patrick, +1-864-787-0820,