Continue reading Southwest Airlines (LUV) lifted by November traffic data

Southwest Airlines (LUV) lifted by November traffic data originally appeared on BloggingStocks on Fri, 04 Dec 2009 13:20:00 EST. Please see our terms for use of feeds.

United Airlines (NASDAQ: UAUA), US Airways (NYSE: LCC) and American Airlines (NYSE: AMR), according to an influential analyst, have run out of options. Jamie Baker of JPMorgan said in a July 20, 2009 report that these companies couldn't do anything to prevent a cash crisis. They only savior available to them would have to be an outside investor. To call the position grim would be optimistic. Unfortunately, it couldn't have come at a worse time.

As Baker was walking the bear into the airline industry, United was starting to celebrate its change in direction. The carrier has improved its on-time rate, according to a USA Today report, and its operations are coming around. Despite the fact that the airline industry has been brutalized by the global recession, the airline has made some progress. Through August, the company's share price doubled, and its ascent has continued in September. So, the company is locked in an ongoing struggle to manage its identity, cope with its past and shape how the world sees it today.

The operational "makeover" has resulted in a reduction of its fleet from 601 jets in 2000 to 386 as of the summer of 2009. In terms of passenger traffic, it's in the #4 spot in the United States - trailing Delta (NYSE: DAL), Southwest (NYSE: LUV) and American. With Q2 revenues off 25.2% year-over-year, however, drastic measures are still necessary.

Continue reading United's battle over its identity

United's battle over its identity originally appeared on BloggingStocks on Thu, 17 Sep 2009 17:00:00 EST. Please see our terms for use of feeds.

Late Thursday, Moody's Investors Service announced that it might downgrade its credit ratings for Southwest Airlines Co. (NYSE: LUV). In a statement, the ratings agency said the airline's Baa1 senior unsecured rating is at risk, due to the likelihood of weak demand trends persisting into 2010.

The downgrade warning comes shortly after LUV slashed airfares dramatically to remain competitive, with some one-way flights running as low as $30 during a recent promotion. "Even with the benefits of Southwest's advantageous cost structure, the current yield environment is likely to challenge Southwest to restore credit metrics to levels supportive of the current rating," said Moody's in a statement.

In addition to the fundamental concerns cited by Moody's, LUV is also facing some challenges on the charts. The stock has shed 52.8% during the past 52 weeks, and long-term resistance from its 10-month moving average looms directly overhead. This trendline hasn't been toppled on a monthly closing basis since September 2008.

Continue reading Southwest Airlines warned of possible Moody's downgrade

Southwest Airlines warned of possible Moody's downgrade originally appeared on BloggingStocks on Fri, 17 Jul 2009 13:00:00 EST. Please see our terms for use of feeds.

Analyst upgrades:

• Citigroup upgraded Adtran (NASDAQ: ADTN) to Buy from Hold on expectations the company will benefit from the broadband Stimulus funds.
• Morgan Stanley upgraded Continental Airlines (NYSE: CAL) to Overweight from Equal Weight based on relative valuation and views the company as a "survivor." Additionally, the analyst lowered 2009 industry estimates but believes it is the last cut for the year and is incrementally more positive on the sector.
• Morgan Stanley also upgraded EXFO Electro-Optical (NASDAQ: EXFO) to Overweight from Market Weight based on valuation.
• Tata Motors (NYSE: TTM) was upgraded to Buy from Hold at Deutsche Bank.
• Ascent Solar (NASDAQ: ASTI) was upgraded to Neutral from Underweight at JP Morgan.
• Mechel Steel (NYSE: MTL) was upgraded to Neutral from Underperform at Credit Suisse.

Continue reading Analyst upgrades, downgrades and initiations: ADTN, CAL, EXFO, JCI, LUV, VAR, CSCO, KMT, EZCH

Analyst upgrades, downgrades and initiations: ADTN, CAL, EXFO, JCI, LUV, VAR, CSCO, KMT, EZCH originally appeared on BloggingStocks on Thu, 02 Jul 2009 09:50:00 EST. Please see our terms for use of feeds.

Continue reading Southwest Airlines (LUV) reaches tentative contract with union

Southwest Airlines (LUV) reaches tentative contract with union originally appeared on BloggingStocks on Mon, 02 Mar 2009 11:00:00 EST. Please see our terms for use of feeds.

Continue reading Southwest heads northeast to Boston

Southwest heads northeast to Boston originally appeared on BloggingStocks on Thu, 19 Feb 2009 15:36:00 EST. Please see our terms for use of feeds.

Southwest Airlines' fuel hedges give it edge over rival airlines originally appeared on BloggingStocks on Fri, 25 Jul 2008 18:30:00 EST. Please see our terms for use of feeds.

Continue reading Will Bush throw a change-up at Yankee Stadium?

Will Bush throw a change-up at Yankee Stadium? originally appeared on BloggingStocks on Tue, 15 Jul 2008 14:45:00 EST. Please see our terms for use of feeds.

Although its stock is down 45% since the beginning of 2001, Southwest Airlines (NYSE: LUV) is the only airline to make a profit every year since it was founded. As The New York Times reports, Southwest's founder Herb Kelleher retired as chairman after 37 years this week. And he got a very warm send off from employees.

This is really one of the keys to Southwest's success. As I wrote in Value Leadership, here are some big reasons that it's been able to profit over the years:

• Treats employees well. Southwest genuinely cares about its employees. It spends a significant amount of time selecting them and it pays them well -- including giving them stock options and profit sharing -- and treats them with respect. The happy employees treat customers well and the happy customers keep coming back.
• More productive. Southwest turns planes around at the gate in 20 minutes. It doesn't serve meals -- just snacks. This cuts time that might be spent waiting for food to arrive at the plane and cleaning up after. And since employees care about the company and are rewarded for Southwest's profitability, they look for ways to keep it profitable.
• Hedging on fuel costs. Southwest hedges jet fuel -- which is the second biggest airline cost. 70% of its fuel is hedged at $51 a barrel which compares favorably to the current $135.

Continue reading Southwest's profit secrets

Southwest's profit secrets originally appeared on BloggingStocks on Sat, 24 May 2008 07:00:00 EST. Please see our terms for use of feeds.

Continue reading ATA Airlines files for bankruptcy; cancels all flights

ATA Airlines files for bankruptcy; cancels all flights originally appeared on BloggingStocks on Thu, 03 Apr 2008 10:00:00 EST. Please see our terms for use of feeds.

I have had some clients ask me, what industry I think will benefit from the $600 rebate checks that are due to be sent out as part of the U.S. economic stimulus package. I think airlines will benefit, especially lower cost carriers like Southwest (NYSE: LUV) and Jet Blue (NASDAQ: JBLU).

The USA Today has an article about the kind of vacation you can have for $600. The article says: "With most Americans expecting to receive a tax rebate of up to $600 ($1,200 for married couples), there are plenty of ways to get the most vacation for your buck, say travel experts. Whether it's a cruise, a tropical paradise, or family travel, these trips can all be done for under $600 a person."

Because we aren't talking about flying around the world or across the Atlantic for that measure, trips to Las Vegas or Orlando, for example, will fit the family, and of course people need a way to get to these destinations, so that's how the airlines become interesting. Throw into the mix potentially stable or even lower fuel costs, and for investors looking for a way to play the "Rebate check" game, you may want to take a look at the airlines.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/2/08

Airlines stand to profit from your $600 rebate check originally appeared on BloggingStocks on Wed, 02 Apr 2008 16:23:00 EST. Please see our terms for use of feeds.

Continue reading More cancellations for American (AMR) and Delta (DAL) passengers

More cancellations for American (AMR) and Delta (DAL) passengers originally appeared on BloggingStocks on Thu, 27 Mar 2008 10:47:00 EST. Please see our terms for use of feeds.

At some point last year did you find yourself stuck in a noisy, overcrowded airport terminal for hours on end waiting for your flight to take off? If so, you were by no means alone. According to the Transportation Department, last year was the second worst year in history for delayed domestic flights.

Splitting my time between America and Europe, I find myself on a lot of airplanes during the year, and luckily I only had one sizable delay on my domestic connections. While I found it rather irritating at the time, looking back on it I feel lucky that it happened only once. That is far better than the national average, which showed that 26% of all domestic flights were delayed during the year.

Granted, national averages have only been recorded going back to 1995, but last year ranked as the second worst year on record, with 2000 coming in slightly worse with 27.4% of flights seeing delays.

What reasons are we given for the excessive flight delays?

Continue reading Delays for airline passengers neared record levels last year

Delays for airline passengers neared record levels last year originally appeared on BloggingStocks on Wed, 06 Feb 2008 18:10:00 EST. Please see our terms for use of feeds.

Today's news that Southwest Airlines (NYSE: LUV) will slow its planned growth in 2008 marks the second time this year that the low-cost carrier has reined in expansion as it struggles with high fuel costs. "We are concerned about growing evidence of slowing economic growth that would inevitably affect passenger demand, coupled with a surge in energy prices," Chief Executive Gary C. Kelly said in a statement.

Clearly the airline industry is challenged by high fuel costs and the prospect for slower domestic growth that would make it harder for no-frills carriers to fill their planes. As Douglas McIntyre pointed out, the saving grace for Southwest is that it has a long-term hedge on fuel prices and is buying fuel at a crude oil cost of about $51 a barrel.

What can airlines do to get profitable during this expensive fuel, slower-growth period? Well, charging customers a bit more so they can have a soda on the plane is probably not the right answer -- all it really does is make the airlines look incredibly cheap. The price airlines charge makes a drink at Yankee Stadium look cheap. How many of us have been on a plane and everyone is snickering and making comments to the person seated next to them about how they can't believe they need to pay for a Coke (NYSE: KO).

I think that airlines, like any business, need to show consumers that they are valued. Charging for a drink has the opposite effect. For an interesting take on airline improvements, read this post by Steve Towers.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/04/07.

Southwest Airlines: Where is the LUV? originally appeared on BloggingStocks on Tue, 04 Dec 2007 15:44:00 EST. Please see our terms for use of feeds.

You have to hand it to Herb Kelleher, the famous CEO of Southwest Airlines (NYSE:LUV). He is retired now, and his legacy was to make the airline the best low-cost provider in the US. But he also did something else that was just as important. He bought hedges against higher oil prices.

According to The New York Times "Southwest owns long-term contracts to buy most of its fuel through 2009 for what it would cost if oil were $51 a barrel. The value of those hedges soared as oil raced above $90 a barrel, and they are now worth more than $2 billion."

While other airlines struggle with the damage that $90 oil will do to their bottom lines, Southwest will have a huge advantage in terms of its cost base for at least two years. That should increase the value of the company compared to almost every other US airline.

Kelleher will now be remembered as more than just a clever cost-cutting and marketing executive.

Douglas A. McIntyre is an editor at 247wallst.com

Southwest's oil hedge could save it $1 billion or more originally appeared on BloggingStocks on Thu, 29 Nov 2007 10:35:00 EST. Please see our terms for use of feeds.

Kyla Ebbert in Playboy: 15 minutes prolonged by Southwest's savvy originally appeared on BloggingStocks on Fri, 16 Nov 2007 16:09:00 EST. Please see our terms for use of feeds.

For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $12.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just 5 months as long as LUV is above $12.50 at March expiration. Southwest would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.

Continue reading Southwest Airlines (LUV) Q3 earnings preview and trade

Southwest Airlines (LUV) Q3 earnings preview and trade originally appeared on BloggingStocks on Wed, 17 Oct 2007 12:23:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Cowen upgraded shares of Motorola Inc (NYSE: MOT) and Nokia Corporation (NYSE: NOK) to Outperform from Neutral. The firm expects Motorola to benefit as the mobile phone market in North America improves as market supply tightens in Q4 and results in better unit pricing, while Nokia's new phones put it in a position to realize higher unit sales.
  
• Credit Suisse upgraded shares of General Mills Inc (NYSE: GIS) to Outperform from Neutral citing management's improved execution and openness, and well as valuation.
  
• Cantor raised shares of AudioCodes (NASDAQ: AUDC) to Buy from Hold after channel checks suggested that Q3 business is tracking well.
  
• OceanFreight Inc (NASDAQ: OCNF) was upgraded to Buy from Neutral at Oppenheimer on valuation and strong dry-bulk fundamentals.

• Lehman upgraded shares of Roche Holding (OTC: RHHBY) to Overweight from Equal Weight.
  
• Goldman upgraded Southwest Airlines (NYSE: LUV) to Neutral from Sell.
  
• Deutsche Bank upgraded Buckeye Partners (NYSE: BPL) to Buy from Hold.
  
• Citigroup raised Canadian Natural Resources (NYSE: CNQ) to Buy from Hold.

Analyst upgrades: MOT, NOK, GIS, AUDC and OCNF originally appeared on BloggingStocks on Thu, 20 Sep 2007 10:25:00 EST. Please see our terms for use of feeds.

Just as airlines such as the new Skybus are taking the first steps on Southwest's no-frills template, Southwest Airlines (NYSE: LUV) is taking a step toward the mainstream. According to the Los Angeles Times, CEO Gary Kelly has stated the airline's intention to join in international code sharing. The move would allow Southwest to integrate its flights with those of other vendors, so that travelers could book flights that include domestic legs from Southwest. The company might also dip its toe into the international market by offering flights to other North and Central American destinations.

Southwest (LUV) hooks up with international flights originally appeared on BloggingStocks on Wed, 19 Sep 2007 15:10:00 EST. Please see our terms for use of feeds.

Gallery: Southwest Airlines: Wardrobe of the Past

Continue reading Passenger too sexy for Southwest Airlines (LUV): Miniskirt gets waitress tossed

Passenger too sexy for Southwest Airlines (LUV): Miniskirt gets waitress tossed originally appeared on BloggingStocks on Wed, 05 Sep 2007 21:03:00 EST. Please see our terms for use of feeds.