Should You Invest in Southwest Airlines?

PHOTO CREDIT: Southwest Airlines

OVERVIEW

Why You Should?

  1. Travel demand across Southwest’s route network has slowly been increasing (especially during the holidays) as people go out and safely fly to their destinations. This is not happening because of vaccinations but simply because people are still willing to fly during this time. This will continue to happen as more people get vaccinated. This slow increase in travel demand will benefit the company and its investors.
  2. Southwest has been hurt because of the 737 MAX groundings before this pandemic occurred. The company had to ground 34 planes and had to delay the delivery for many more. However, the Boeing 737 MAX is returning to service on March 11th. This will continue to ramp up as well. These new planes are more efficient than the older models, which means that Southwest can lower operating costs by operating these aircraft.
  3. Southwest Airlines has had to adapt to this pandemic. One of the ways that the company did this was to lower route frequencies to areas with corporate travel and increase frequencies (or add new routes) to areas with a high demand for leisure travel. This has benefited the company and its investors during this pandemic and in the future.
  4. Southwest Airlines has an extremely good domestic exposure. Many analysts are saying that the demand for domestic travel will come back before demand for international travel does. This domestic exposure will benefit the company and its investors.

Why You Should Not?

  1. Southwest Airlines faces tough competition from many other carriers in the United States. Some of these companies include Alaska Airlines, JetBlue, American Airlines, United Airlines, Delta, and many others. This has hurt the company in the past and might continue to hurt the company and its investors in the future.

MY OPINION

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.