Southwest Airlines Co. (NYSE:LUV)

Can't drop much lower and some of the former ATA Routs may be taken up by the former co booking partner, MAYBE?

Just going for the value plays in the airline business.

Anyone ever see southwest airlines in the news recently? Looking good to me!

Operations and good management.

FAA Regulatory scrutiny between now and June 30 will 1) impact flights (reduce revenue), 2) delay maintenance outsourcing contracts (increase costs), 3) cause LUV to invest in new processes and technology (increase costs), 4) cause LUV to accelerate new aircraft acquisitions (retire 735s and 733s & acquire 737s) (increase costs) and 5) tarnish LUV's brand image. Price of JetA is increasing and LUV's oil hedges continue to drop as a % of total fuel costs (although still best in the industry)

Oil prices are obviously skyrocketing. Airlines already have slim profit margins and can only afford to pass costs to consumers to match oil prices. Not only that, but consumers are now spending their income on cheaper methods of travel if they even go anywhere because their spending record dollars on milk and eggs.

As a frequent traveler to/from Las Vegas, where Southwest has a major hub, I can attest to the differential service between this airline and other airlines. While many of my business colleagues profess a hatred for the Southwest "cattle call" boarding process, I've never had a problem with it (particularly given the airline's recent revision of its boarding process). Further, since I am often unable to make travel plans with any significant degree of foresight, I really appreciate the airline's flexibility in terms of both its number of available flights and its refund policy.

In my opinion, as more tourists flock to Vegas (I'm also banking on the continued success of Vegas-based destination attractions, such as casinos, over the next year), Southwest Airlines will be the carrier that most benefits from the traffic.

Despite the recent regulatory issues regarding some of its fleet, the fact that other airlines have recently experienced similar, and oftentimes worse, technical problems, leads me to believe that such issues will have minimal impact on the company or its PR machine.

I expect the price of oil to drop slightly, but not to fall bellow 95/ barrel again. south west is a proven airline that has delt with recessions in the past and will make it through this one as well. they know where to cut to keep their profit margin higher than the compititon

stock dropped due to bad publicity over maintenance lapses. Herb & Co will deal with this head on and come out smelling like a rose. A purchase today - at the bottom - will outperform SPY in the next 12 month period.

we see luv being pummeled by a maintenance scare that is somewhat fishy. One of the airplanes in question was already retired, 3 more undergoing other "heavy" maintenance and none of the rest found cracks. All over a 90 minute inspection. Hmmm. It all boils down to how you interpret a directive as to whether the inspections previously done were to be done visually or by non destructive testing (ultrasonic or eddy current testing). FAA changed their minds about how to do them and then sorted it out. But wait, higher ups changed their minds and decided to reopen a dead subject months later and impose a historic unheard of fine. All under the direction of Sen. Oberstar - Minnesota (Northwest Airlines dear friend). Sorry, more flash than fire. The airline is still fundamentally sound and the public has a short memory. They have a great track record of bringing home the bacon and own most of their own equipment, the management is all long termers, strong stock buyback (1.8 billion in the last 2 years), and they admit they are looking at international, where a lot of the dinosaur carriers are making the money to shore up money losing domestic routes. These guys grow and make money at the same time and they do it consistently. If they had not bought back their own stock, but declared that as profits what would their numbers look like? The fact is, in the long run, this is a good side bet. Not all my eggs, but say 10% of my basket.

I would not invest in South West Airlines. South West Airlines last stock price on February 25, 2008 was $12.97 and its 52 week range is between $11.02 and $ 16.96. The last stock price is below the dates from 2002 to 2004; which were $13.09 in 2002, $16.14 in 2003, and $16.28 in 2004. The price–earnings ratio is down from the 2004 number which was 40.7 to 15.44 of 2008. Also, the market–to–book value ratio is down from 2.31 in 2004 to 1.37 in 2008. These numbers relate to the market cap which is currently $9.54B which is down from $12.779B in 2004. This means the company is not valued as high as it once was. This may be from them not increasing their dividend payout ratio.

There are some explanations for the low stock prices which reflect how the company has not been managing finances well. I have noticed they used borrowed money to purchase stock in the recent year. Also, the accounts payable is way up which gives them less leverage to borrow more and takes away from equity stockholders have in the company. From 2003 to 2004 the company increased the debt ratio and debt–to-equity ratio which also means the company owes more to debt rather than a stockholder which means stockholders do not have as much stake in the company. Also, from 2003 to 2004 South West’s profitability, efficiency, return on equity, and return on assets all decreased. This is a bad sign because it means the company is not returning investments back to its owners. This means they are not generating enough revenue for what is invested. I believe they have to many liabilities from 2003 to 2004 the company had less working capital, the current ratio decreased, the quick ratio was just able to cover current liabilities, with the quick ratio they wouldn’t have been able to cover current liabilities, and the times interest earned gave them less coverage. These reasons are why South West Airlines has the current deflating stock situation. A company has to improve these ratios not decrease these ratios.

Southwest Airlines hedged the fuel prices for future purchase and are well below the national average for jet fuel.

A pretty complete and up-to-date report can be seen here...I have shares of LUV and fly Southwest exclusively...if they dont fly there, then I drive.

http://en.wikipedia.org/wiki/Southwest_Airlines

Outside its recent inspection ordeals, the airline provider was number one in the market agaist all its competition.Its still a potential gainer i the long wrong.

Travel will be hurt more by the price of oil.

They are the leaders in the industry. The grounding of the planes will have a very little impact on them.

High fuel prices, maintainance problems spell a pullback.

Southwest airlines are a very consistent airline co., i think they will be here for the longhaul and their co ratings are very good in cuistomer satisfaction

The recent allegations will lead to severe financial straints of the company. These financial burdens are not limited soley to the fines that will be levied, but also with the increased inspection costs and the inability to carry minor repairs over to future financial quarters. The increase in airfares that will follow will minimize their niche market. We also have not mentioned the fact that class-action lawsuits are always lurking when gross negligence and public endangerment has already been proven and documented.

Airline, Oil, Recession... need I say more?