#4 - Southwest Airlines (NYSE:LUV)
When the economy began to go into lockdown back in March, Southwest Airlines (NYSE:LUV) was trying to find a bottom. At the time, the CARES program was taking shape and it appeared that the airlines were in line to receive some of the government’s stimulus.
However, that didn’t happen as quickly as first anticipated. In fact, as more information was released and it appeared that any stimulus funds the airlines received might come with odious strings attached, the stock continued to decline.
But news that Southwest is one of approximately ten carriers to reach an agreement with the government sets the company to receive $3.2 billion in direct support as well as a $1 billion loan. In return, Southwest along with the other carriers will issue warrants to the government for a portion of its total equity. The company also had to pledge to not layoff any of its workforce prior to September 30.
Reading the tea leaves, it’s likely that the government is intending to have the economy up and running before the fall. Of course, like many things surrounding this virus there is no guarantee that will happen. And even if it does, it’s impossible to predict consumer sentiment. And more importantly, with the economy assuredly heading for a recession of some severity, will consumers be able to afford a flight no matter how discounted the fare is.
Either way, the injection of capital gives Southwest a longer runway. And considering that it was in a better position than some airlines prior to the pandemic, which should count for something.
About Southwest Airlines
Southwest Airlines Co operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2023, the company operated a total fleet of 817 Boeing 737 aircraft; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.
Read More - Current Price
- $31.86
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 11 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $30.78 (3.4% Downside)
