Analysts remain optimistic about Southwest Airlines Co.'s ability to recover and get back to profitability despite the carrier's costly holiday meltdown.
However, executives say bookings have begun to improve for March, and they expect Southwest to be back to normal by the second quarter., an analyst at JPMorgan Chase & Co., said in a note he thought Southwest would temper its growth rate and incur elevated costs due to what he described as the"Christmas Calamity."
Southwest shares fell 3% on Thursday to $35.70. They were up 1.7% to $36.32 as of afternoon trading on Friday. Investors, on the other hand, will likely take a"wait-and-see approach" to the airline's shares in the near term, she wrote. Longer term, she said Southwest's"strong balance sheet" and loyal customer base will likely drive higher results.
Management’s view is a capacity reduction would not fix the problem as they are resourced properly from a staffing and aircraft standpoint, but rather circumstances were unprecedented," Cunningham wrote in a note."This is all likely true on some level, but during the recovery, airlines that push growth have seen consistent operational issues – a very delicate balance."
Source: News Formal (newsformal.com)
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