This Is Why Southwest Airlines Is No Longer an Investor Favorite
Skift Take
Southwest is almost a victim of its own success. Investors have massive expectations for the stock, and since Southwest is now performing no better than the competition, the company is losing its luster a bit. But the airline should be OK.
For decades, Southwest Airlines has been an investor darling.
That's what happens when an airline reports 43 consecutive years of profitability, all while avoiding bankruptcy and keeping costs lower than the competition.
But that's beginning to change. Yes, absolute profits remain high — Southwest made $388 million in the third quarter — but some investors are questioning whether the airline can continue exceeding competitors' returns in the new airline world. The bigger legacy carriers, United, Delta, and American, are in stronger financial shape now, and ultra low cost carriers like Frontier and Spirit are increasingly nimble competitors in major markets.
Adding to investor fears, Southwest on Wednesday reported revenue per available seat mile — an industry metric measuring how money an airline earns for each seat it flies one mile — decreased 4.1 percent, year-over-year. That's mainly a function
