| From: Sam | 9/13/2024 10:50:46 AM | | | | | | Southwest Airlines is experiencing one of the biggest shakeups in its 53-year history [The Dallas Morning News]
TRIBUNE CONTENT AGENCY 11:59 PM ET 9/12/2024
Symbol Last Price Change |
| LUV | 29.1 | +0.23 (+0.7967%) | | AAL | 11.025 | +0.145 (+1.3327%) | | QUOTES AS OF 10:48:28 AM ET 09/13/2024 |
Southwest Airlines (LUV) is entering a new era, whether its shareholders, customers and leaders like it or not.
The Dallas-based air carrier won’t have its longtime open seating policy. It’s adding new premium options in the cabin and creating overnight flights.
Soon enough, the company’s longest-serving CEO and current executive chairman Gary Kelly won’t be leading its board of directors.
On Tuesday, Southwest(LUV) announced Kelly would not run for reelection for his role with the board after the 2025 annual shareholders meeting. Kelly, alongside Southwest(LUV) CEO Bob Jordan, was pressured by activist investor Elliott Investment Management to exit the airline. Jordan will remain at the company and Kelly said he supports Jordan’s leadership.
“It’s time to shake things up, not just stir them a bit,” Kelly wrote in a letter to shareholders announcing his departure. “The wisdom comes in knowing what to change and what not to change. We know that changes are required to some of our historic business practices. We know we will need to continually bring in new talent — in leadership and on the board.”
What’s changing at Southwest(LUV)?
Southwest (LUV) is in a different atmosphere today than five decades ago, when it grew roots in Dallas.
According to the company, 80% of Southwest(LUV) passengers and 86% of potential customers prefer an assigned seat. In August, Southwest(LUV) took those statistics and changed its open-seating policy, the first step away from a tradition the airline had started with.
“Our team does view this as a strategic transformation of the company,” Jordan said July 25 during the company’s second-quarter earnings call.
New seat configurations require Federal Aviation Administration approval, Jordan said. That can take several months. Southwest(LUV) has a fleet of roughly 800 aircraft that will see updates, including new seat designs and cabin interiors announced earlier this year. Jordan said the carrier needs to finish designing the seat layout. Then comes the long certification process.
The airline will also add premium, extended legroom rows to the cabin. Southwest(LUV) expects roughly one-third of seats across the fleet to have extended legroom, the same amount as competitors that fly similar narrowbody aircraft.
Southwest (LUV) also announced the addition of red-eye flights. The flights will begin on Valentine’s Day with five initial nonstop routes: Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore.
“Continuing to evolve is core to our success, and we’re moving with urgency to restore our industry-leading financial position while staying true to who we are,” Jordan said in a video message Sept. 10. “As you know, we have plans to introduce assigned seating and premium seating options and offer red-eye flights. We will have more details to come at our investor day later this month.”
Southwest (LUV) has struggled financially since the pandemic. The changes are expected to create a profitable airline, one that Elliott has been pushing for in order to make money for shareholders.
However, Kelly, the company’s longest-serving leader, who has seen the airline go through many challenges, is leaving.
Kelly, 69, notified the board and company Sept. 9 of his plan to not stand for reelection at Southwest’s 2025 annual shareholders meeting and retire immediately afterward. His retirement comes alongside the departures of nearly half of Southwest’s 15-person board, including David Biegler, Veronica Biggins, Roy Blunt, William Cunningham, Thomas Gilligan and Jill Soltau, who each submitted resignations on Sept. 9, effective after the company’s scheduled board meeting Nov. 21.
Sept. 9 was also the day Southwest(LUV) and Elliott met at Elliott’s offices in New York to discuss changes the investment firm has called for, which focus on three main asks: enhance the board of directors, upgrade leadership and conduct a business review. Kelly, who attended the meeting with two independent directors, left unnamed in his letter to shareholders, said in the letter he believes discussions were productive.
Jordan thanked Kelly in a letter on Sept. 10 for his time at Southwest(LUV). During Kelly’s tenure, the company extended its streak to 47 years of profitability until the pandemic upended every hospitality business.
With the departure of seven directors, Southwest(LUV) will be left with 12 directors after the 2025 annual meeting and Kelly’s retirement.
Questions still remain
Southwest (LUV) customers have a lot of unanswered questions as to how these changes will impact them.
Some worry removal of the open-seating policy won’t be the only change and that more could follow, such as to bag policies and unique perks that Southwest(LUV) has developed over its history.
Meryl Evans, 54, a traveler who lives in Plano, said she always checks Southwest(LUV) first when she flies. Evans was born deaf and finds traveling with the airline the easiest experience for her. However, she’s concerned about not being able to choose her seat.
“It’s not about getting to sit near the front,” Evans said in an email. “It’s about being close to the staff for anything that comes up. I’m also concerned they’re taking the LUV out of Southwest(LUV). The actions and strategy feels cold, corporate. I know it’s part of doing business and making a profit, but LUV is the soul of what makes Southwest(LUV), well, Southwest.”
Customers are also seeking clarity on assigned seating. Southwest(LUV) has said more information will come at the airline’s investor day Sept. 26.
With the departures of Kelly and the six other board members, there’s much uncertainty as to who will come next. Elliott has named 10 candidates it believes have the experience to lead Southwest(LUV) to profitability.
The airline said it will fill four vacant spots and consider up to three of the 10 candidates Elliott proposed in August.
Southwest’s board of directors can hold its executives accountable, a key part of keeping the airline functional.
Rob Britton is an adjunct faculty member at Georgetown University’s McDonough School of Business and also spent 25 years at Fort Worth-based American Airlines(AAL).
“I’m not sure that new board members will make much of a difference, but Southwest(LUV) absolutely needs to commit to doing some things differently and some things better,” Britton said.
The hot seat
That raises a question: What will happen with Jordan?
“The board and corporate governance changes announced today will enhance our focus on returning to the high level of financial performance that we — and our shareholders — expect,” Jordan said in a video message.
There’s no time like the present, many analysts have said regarding Southwest’s need to change.
Brett Snyder, who writes aviation industry blog Cranky Flier, said investors may like the changes Elliott is proposing. But if the changes don’t pay off, that puts all eyes on Jordan.
“Ultimately it’s, ‘Let’s see where this goes,’ and if it doesn’t improve revenue performance soon, then, yeah, he could absolutely be in the hot seat,” Snyder said.
Andrew Watterson is another executive at Southwest(LUV) who would be held accountable if things don’t change, he said.
Watterson is Southwest’s chief operational officer and defended the airline when operations crumbled over the holidays in 2022. He stood before a U.S. Senate committee and fielded questions from lawmakers about what went wrong and how Southwest(LUV) would make changes.
“The two of them are the ones that have to be thinking, ‘We have to do this fast. We have to do it well. We have to show results quickly so that people think we’re the right people to be doing this,’” he said.
Immediately after the Sept. 10 departure announcements, Elliott put out a short statement calling the exits “unprecedented.”
“The need for thoughtful, deliberate change at Southwest(LUV) remains urgent, and we believe the highly qualified nominees we have put forward are the right people to steady the board and chart a new course for the airline,” Elliott wrote.
Keith Gottfried, managing member of Gottfried Shareholder Advisory, called the response “interesting.”
“What’s interesting about Elliott’s response yesterday was that it was short and it did not mention Bob Jordan,” he said.
What does the future entail?
After the moves on the board, there’s still more to come from the airline. Board vacancies are coming soon and an investor day is scheduled for the end of the month at Southwest’s Dallas headquarters.
Southwest (LUV) can appoint new directors, but there are other ways board vacancies could be filled. Gottfried pointed to two options: a settlement agreement could be negotiated or a proxy contest could start.
With a settlement, or cooperation agreement, he explained, Southwest(LUV) could say to Elliott that it likes up to three of the candidates Elliott proposed and wants to interview and hire them. Southwest(LUV) has already said it will consider some of Elliott’s candidates.
In a proxy contest, Elliott, with 10% commons shares in Southwest(LUV), could call a special shareholders meeting and potentially remove the entire board. This would require support from more shareholders. However, Gottfried explained that a special shareholders meeting isn’t likely until 2025 due to the planning involved.
More is still to come regarding Southwest(LUV), whether it be changes to leadership or operations. Company leaders think the airline is headed in the right direction.
“Southwest has a great plan,” Jordan said |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Sam | 9/20/2024 8:00:30 AM | | | | | | The World Opens To Alaska Airlines With Its Merger Approval
Sep. 19, 2024 12:01 PM ET
Tim Dunn
Summary- Alaska Airlines completed its acquisition of Hawaiian Airlines and expects to integrate operations while maintaining the Hawaiian brand and ensuring significant operations in Hawaii.
- The merger is expected to generate $250 million in synergies, with integration costs estimated at twice that amount, enhancing Alaska Air's network and operational efficiency.
- ALK aims to avoid past merger mistakes by leveraging Hawaiian's assets and expanding its international presence, particularly in Asia and the South Pacific.
- The merger positions Alaska as a strong mid-tier airline, benefiting from favorable macroeconomic conditions, including lower fuel prices and increased consumer spending.
Alaska Airlines, a subsidiary of Alaska Air Group, Inc. (NYSE: ALK), completed its purchase of Hawaiian Airlines (delisted) on July 18, 2024. While the U.S. Dept. of Justice recently objected to two previous airline transactions, both involving JetBlue Airways Corporation ( JBLU), the DOJ previously allowed its review of the Alaska-Hawaiian merger to end on August 20 without comment. The Dept. of Transportation took another month before issuing its approval based on several conditions, most of which are viewed as pro-consumer and not significantly impacting the operation of Hawaiian as a subsidiary of ALK or negatively impacting the value ALK expected from the transaction. The State of Hawaii obtained assurances from ALK that it would continue to maintain significant operations and employment in Hawaii, including for existing international Hawaiian Airbus SE ( OTCPK:EADSY) A330 aircraft, continuation of interisland service including in codeshare relationships with other airlines, and maintaining loyalty program benefits, all of which ALK expected it would need to provide. The next step in the process is for the FAA to allow Alaska and Hawaiian's operations to be integrated; although ALK has committed to retaining the Hawaiian Airlines brand, it will merge the operations of the two carriers under a single operating certificate.
Alaska Hawaiian merger summary (alaskaair.com)
A Fast Timeline for An Airline Merger
Alaska Airlines announced its merger with Hawaiian on December 3, 2023, so it completed the transaction in just over nine months which is rather speedy for airline mergers and faster than its estimates at the time the merger was announced. While Alaska Airlines has repeatedly sought to grow beyond its traditional northwest U.S. presence (the airline is headquartered in Seattle where it operates its largest hub), it saw an opportunity not just to improve on how it handled its previous acquisition of Virgin America during the last ten years but also to help out a fellow legacy airline which has struggled mightily since Covid. In contrast to Virgin America which was a short-lived domestic airline startup that was part of bringing discounted domestic premium cabin services to U.S. transcontinental markets, Hawaiian Airlines was one of the nation's oldest airlines, founded 30 years before Hawaii became a state in 1959. As is the case in the state of Alaska, aviation has played a key role in Hawaii as a result of the geographic expanse of the state, its military importance to the country, and its attractiveness as a tourist destination for people not just from the mainland but from other countries. The airplane became essential to connect the Hawaiian islands and to extend Hawaii's position as the largest economy in Polynesia. Hawaii was a key stop on some of the earliest air routes from the mainland U.S. to the South Pacific and to Asia.
continues at seekingalpha.com |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: JubilationT | 10/1/2024 6:13:17 PM | | | | | | Can anyone shed some light on the "breakthrough feature" in premium shades spoken about at the bottom?
Solar protection systems expert, Vision Systems has engineered three SPD (suspended particle device) dimmable windows with distinctive characteristics adapted to each cabin class. These windows eliminate shades that block the view and require regular maintenance, while protecting passengers from unwanted daylight or glare, and include innovative features such as multizoning, lighting, electroluminescent touch control and information displays.
 Vision Systems’ SPD (suspended particle device) dimmable windowsVision Systems has also created a smart partition that can display videos. This divider can remain transparent or opaque when no content is being displayed.
The company also says that a “breakthrough feature” in premium shades will be unveiled this year. All these innovations can be synchronised and controlled using in-house developed cabin management systems, via individual panels, IFE tablets or flight attendant panels. |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: OldAIMGuy | 11/7/2024 11:15:58 AM | | | | | | My Three year trading history:
Last purchased at $15.82 in late 2022, it's been a long wait for a round trip trade. Yesterday's sale of 10% of the holding at $24.119 turns in a healthy 52% LIFO gain on those shares. There's still plenty of share inventory left to sell if the rally continues and now there's also a nice bit of reserve cash on hand should the price drop back toward the mid $16s.
StockCharts 3 Year History
schrts.co
OAG
Buy from the Scared; Sell to the Greedy..... |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Sam | 11/18/2024 12:32:59 PM | | | | | | Airline sector jolted by Spirit Airlines' bankruptcy
Nov. 18, 2024 12:09 PM ET Frontier Group Holdings, Inc. (ULCC) Stock, SAVE Stock JBLU, LUV, ALK, ALGT, DAL, UAL, AAL, JETSBy: Amy Thielen, SA News Editor
seekingalpha.com
The long-anticipated bankruptcy of ultra-low-cost carrier Spirit Airlines (NYSE: SAVE) is reverberating through the airline sector, with rival Frontier Group Holdings (NASDAQ: ULCC) also suffering a double-digit loss in sympathy with an 18% drop in Spirit ( SAVE).
After years of losses, months of speculation and unsuccessful attempts to remain afloat with several cash infusions, Spirit Airlines ( SAVE) declared bankruptcy on Sunday, having already hammering out a debt restructuring agreement with a majority of its bondholders. The Chapter 11 reorganization, with commitments for a $350M equity investment and $300M debtor-in-possession financing arrangement from current bondholders, is expected to be complete in Q1 2025.
Although the last major airline bankruptcy was 13 years ago, the budget airline industry has been plagued recently by competition from legacy carriers, rising labor costs, reduced aircraft capacity, and overcapacity in coveted routes along the east coast and Caribbean.
Spirit’s ( SAVE) low-cost business model was predicated on travelers’ preference for à la carte booking, which typically translates into increased revenue for ancillary charges. However, in the most recently reported quarter, Spirit’s ( SAVE) non-ticket revenue fell 9.6% while fare revenue was down 22.2%, resulting in total revenue per passenger flight segment dropping 15.3%. At the same time, the adjusted cost per available seat mile (“CASM”) increased 2.9%, largely blamed on Spirit’s reduced aircraft utilization.
By comparison, Frontier ( ULCC) uses a similar business model as Spirit ( SAVE), but with a “bundled” approach to add-on costs. So, while both carriers realized a decline in non-ticket revenue, Frontier’s ( ULCC) fare revenue was down just 1% while costs, or CASM, were also down 6%.
Frontier's ( ULCC) cost efficiency is supported by its use of larger aircraft. Spirit ( SAVE) uses smaller Airbus aircraft like the A319NEO while Frontier ( ULCC) relies on the larger A321NEO, making it more difficult for Spirit ( SAVE) to achieve the same cost savings as Frontier.
To compete with carriers like JetBlue ( JBLU) and Southwest ( LUV), and to address the decline in ancillary revenue, Spirit recently launched tiered ticket pricing enabling passengers to pay a bundled fare for tickets, seat assignment, and baggage.
These measures are designed to redefine Spirit ( SAVE) as "high value low-cost carrier," CEO Ted Christie said on the company's latest earnings call.
"We are not abandoning our low-cost position, but rather we are leveraging it," Christie added.
Unfortunately, the bankruptcy filing proceeded any data whether this new strategy resonates with customers.
Shares across the airline sector are in the red with Frontier Group ( ULCC) down 13%, JetBlue ( JBLU) -7%, Allegiant Travel ( ALGT) -2.4%, Alaska Air Group ( ALK) -2.3%, Southwest ( LUV) -0.7%, Delta Air Lines ( DAL) -0.8%, United Airlines ( UAL) -0.4%, American Airlines ( AAL) -0.6%. The U.S. Global Jets ETF ( JETS) is down 1.4%. |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Sam | 1/6/2025 1:25:02 PM | | | | | | American Airlines Stock Gets 3 Upgrades to Buy. Here's Why. -- Barrons.com
Dow Jones Newswires January 06, 2025 12:55:00 PM ET
American Airlines stock was rising Monday as analysts at Jefferies, TD Cowen, and Melius Research upgraded shares of the carrier to Buy from Hold.
Shares of American Airlines climbed 4.8% to $17.79, on track for the highest close since July 19, 2023, according to Dow Jones Market Data. The gains came after the three firms also raised their price targets. The S&P 500 was up 1% at midday.
Jefferies' upgrade was included in the firm's 2025 Airlines Outlook, where analyst Shiela Kahyaoglu increased the price target on the stock to $20 from $12.
Kahyaoglu pointed to lower capital expenditure and a 10-year card deal with Citi, writing that these factors could drive "significant surprise to the upside in 2025 against a rationalizing industry backdrop."
The carrier's focus on medium and small markets that can be serviced by its regional fleet marks a "stark bifurcation from network peer strategies" centered on larger coastal hubs, the analyst wrote. Kahyaoglu anticipates a continued increase in total revenue per available seat mile, or TRASM, in 2025.
TD Cowen analyst Tom Fitzgerald raised the price target to $25 from $17, over eight times the airline's 2025 earnings per share estimate.
"In hindsight, we were too early with our upgrade a year ago," Fitzgerald wrote, adding that the bank "failed to appreciate" the transitory nature of headwinds when downgrading the stock to Hold from Buy in July 2024.
"We view consensus estimates as too low given tailwinds and favorable comps through 2025," Fitzgerald wrote, citing better domestic pricing and improved credit card economics as two examples.
The analyst also cited potential upside to the carrier's Latin American franchise in 2025 as ultralow cost carriers continue to slash capacity in those markets.
Melius Research analyst Conor Cunningham increased the price target to $23 from $18 as part of the firm's Travel & Transports 2025 Outlook.
"Our bull call on American is pretty simple: given our positive view of the U.S. airlines in 2025, we are broadening the stocks we like," Cunningham wrote.
The analyst nodded to American's credit card extension with Citi and efforts to regain corporate travel market share that was lost when the carrier shifted to a new distribution strategy. These levers "should lead to above-industry unit revenue improvement and margin expansion," Cunningham said.
Although the analyst would prefer a more balanced international footprint, American is poised to benefit from continued strength in the Atlantic as well as "an improving Latin American setup," Cunningham wrote.
As American Airlines stock snapped a three-day losing streak on Monday, competitors were also on the rise.
United Airline Holdings and Delta Air Lines saw the biggest gains, rising 5.2% and 2.6%, respectively, while Alaska Air Group and Southwest Airlines were up 1.8% and 1.6%. |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Sam | 2/26/2025 5:00:15 PM | | | | | | American Airlines Stock Snags an Upgrade. Why Legacy Carriers Are Flying. -- Barrons.com
Dow Jones Newswires February 26, 2025 03:14:00 PM ET
When it comes to airline stocks, the skies have rarely been friendly to investors.
The current environment is an exception.
"The U.S. airline industry is entering a goldilocks period," Redburn Atlantic analyst James Goodall wrote Wednesday.
He and other analysts are heralding boom times for carriers' stocks because a rational competitive environment and ongoing travel demand should bolster the industry. The main beneficiaries of those trends are the Big Three legacy airlines -- American Airlines, Delta Air Lines, and United Airlines.
Goodall upgraded American stock to Buy from Neutral on Wednesday, raising his price target to $24 from $18. He also reiterated Buy ratings on Delta and United, with ratings of $80 and $135, respectively.
Other strong operators like Alaska Air Group have also gotten analyst endorsements. These players have more flexibility, the thinking goes, than their budget-oriented peers, who struggle to attract valuable business travelers.
The thesis for Goodall and other airline bulls is that there are legitimate, if temporary, disruptions to the cyclicality that made airlines so hard to invest in for much of their history. In other words, it's different this time. (Famous last words?)
In the past, airlines tended to order new planes when they were flush with cash; when those planes were delivered, it caused a spike in capacity, forcing them to lower fares to the detriment of margins. Once that eventually corrected overcapacity, the cycle could begin again. But supply chain constraints have caused this cycle to break down, and the resulting dynamic is why airline stocks are a good investment right now, Goodall says.
"Massive issues within the aerospace supply chain -- from Boeing's well publicized production line shortfalls, new engine technology teething issues and a shortage of parts...have resulted in a substantial shortfall in deliveries since the pandemic," he writes.
It appears there will be a multiyear period when capacity is constrained as airlines deal with an older fleet of planes and have to wait longer for new ones. That limited supply, along with demand that has yet to wane, is a recipe for stronger prices.
"Capacity discipline -- something most airlines struggle with in normal periods -- should, therefore, be forced upon the airline industry in the medium to long term."
Delta and United have already seen big runs -- up 49% and 117% respectively over the past year, outperforming the Roundhill Magnificent Seven ETF's 36%. But Goodall sees more gains ahead for the two, as well as for American stock, thanks to stronger earnings and free cash flow. His American upgrade also takes into account its new lucrative credit card deal with Citi.
By contrast, Goodall has a Sell rating on Southwest Airlines and lowered his price target by $1 to $28. That's perhaps not surprising given all the problems at that airline. Southwest announced the first corporate layoffs in its history last week, and was hit with a government lawsuit in January related to late flights.
Even with Southwest stock's 8% losses year to date, it is still trading at a level that "implies a much larger margin recovery than we foresee."
Certainly, investors may be skeptical of airlines' long-term potential, and worried that multiple recent crashes and close calls are a headwind for the group.
However for now, a broader updraft seems intact. The stocks may no longer be selling for peanuts, but they still don't look as pricey as luxuries like extra leg room.
Write to Teresa Rivas at teresa.rivas@barrons.com |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Sam | 3/4/2025 3:15:28 PM | | | | | | | Airline Stocks Decline as Economic 'Soft Patch' Dampens Domestic Demand |
|
|
| Dow Jones Newswires March 04, 2025 12:18:00 PM ET
Economic uncertainty is creating turbulence for airline stocks as concerns about demand for domestic air travel loom.
"Our attention has shifted to what appears to be an emerging economic 'soft patch," said analysts at Deutsche Bank Research as they downgraded JetBlue Airways and Frontier Group Holdings on Tuesday. "To what extent and duration are not clear at the present, however, we do think it will likely weigh on demand for air travel, particularly the domestic discretionary segment."
Shares of JetBlue are down about 7.5% at $5.98, while Frontier retreated 5.6% to $6.55. United Airlines tumbled 7.2% to $85.09, while Delta Air Lines declined 6.5% to $54.68. American Airlines edged down 5.1% to $13.17.
The analysts say consumers could hold off on travel and certain purchases as President Trump enacts policies that are expected to raise prices.
Full-service carriers are better positioned to weather the effects of trade actions, say the analysts, who maintain their buy ratings on American, Delta and United. Price targets for Frontier Group, parent company of Frontier Airlines, and JetBlue were lowered as the analysts see economic uncertainty having a disproportionate impact on low-cost and ultra-low-cost carriers. |
|
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Sam | 3/10/2025 12:06:53 PM | | | | | | Major U.S. airlines plummet as recession fears add to woes
Mar. 10, 2025 11:12 AM ET Delta Air Lines, Inc. (DAL) Stock, UAL Stock, AAL Stock, ALK Stock, LUV Stock, JBLU Stock, ULCC Stock, SNCY Stock, SKYW Stock, JETS SP500, COMP:IND, DJIBy: Ahmed Farhath, SA News Editor
seekingalpha.com |
| | Airline Discussion Board | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| |
