Prospect

United wants to spend money on everything they can think of except their pilots. Electric planes, plant fuel planes, supersonic planes, flight schools that discriminate on the basis of race and sex, huge orders for planes assuming the demand will keep growing forever...

Seems as risky as AA.

Mozam

This thread is SWA bashing only. please take any other mud slinging elsewhere. 😀

TransWorld

They will, unless they decide to lease a bunch of them. Also, cash flow will help to pay as deliveries occur. My crystal ball says, by the later part of this decade, all of the big three will have similar debt and all pretty young fleets.

loveislost7M8

SWA Stock is tanking again today after CEO "No Sho BoJo" open his big fat Bobble Head Mouth and said that the December meltdown wasn't due to technology failures... What an idiot! Good Article, We are F#$%ed:

3 Reasons to Fly Far Away From LUV Stock

For obvious reasons, Southwest Airlines (LUV) and LUV stock underperformed its peers over the past year

By Will Ashworth, InvestorPlace Contributor Feb 21, 2023, 3:36 pm EDT

For obvious reasons, Southwest Airlines (LUV) and LUV stock underperformed its peers over the past year.

Its CEO should have testified in Washington.

Its point-to-point route system cracks under pressure.

Southwest Airlines (NYSE:LUV) COO Andrew Watterson appeared before a Senate panel on Feb. 9 investigating what happened in December that forced the airline to cancel thousands of flights, stranding passengers trying to get places over the holidays. Because of the debacle, between Dec. 1 and Dec. 28, LUV stock lost 20% of its value.

Fortunately for its shareholders, LUV stock has bounced back a little.

It’s up nearly 9% through the first seven weeks of 2023. Despite the rebound, Southwest’s share price has been on a downward slide for the past five years. A $10,000 investment in LUV in February 2018 is worth $6,100 today. The same $10,000 invested in the S&P 500 is worth $14,800.

That’s a slight difference.

Years ago, I read Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success, the book about founder Herb Kelleher and the airline’s launch. Written by Kevin Freiberg and Jackie Freiberg, it was first published in January 1995.

At the time, I thought Southwest was the most innovative airline anywhere, only to find out in December that the airline’s scheduling system had been held together by duct tape all these years. It finally gave way.

Here are three reasons to fly far away from LUV stock.

I couldn’t help but notice that CEO Bob Jordan wasn’t in the hot seat on Feb. 9, despite a Senate committee requesting his presence at a hearing held that day. The weird thing is that Jordan was in Baltimore the day before at a rally for the airline’s employees. He flew back to Dallas that same day (on another airline), opting not to drive the 35 miles to D.C. and do the right thing by testifying before the Senate.

The Dallas Morning News reported that the panel was more than happy to hear from an operations person like its COO, so it wasn’t a big deal that the CEO skipped the hearing.

A Feb. 15 op-ed from Airwaysmag.com contributor Joshua Kupietzky believes Bob Jordan should be given a second chance. When I first read the headline, I was sure that it defended the CEO’s decision to skip the Feb. 9 hearing.

Nope.

Instead, Kupietzky argued that Jordan — who replaced long-time chief executive Gary Kelly after Kelly had spent 17 years in the top job — had handled the December meltdown as professionally as anyone could, given the poor state of Southwest’s technology.

“The Christmas meltdown was years in the making, and it is unfair to point the blame at Mr. Jordan, who ..took over the position of CEO only a year ago,” Kupietzky wrote.

So, by Kupietzky’s logic, if a 40-year-old bridge collapses in Dallas, the current municipal government shouldn’t take any of the blame for the incident. But I guess the buck doesn’t stop with the CEO.

The bottom line is that Jordan should have been the one in the hot seat in front of the Senate committee.

Climate Change and a Point-to-Point Route System
When the weather is perfectly fine, Southwest’s point-to-point route system works like a charm, allowing the airline to fly more routes in 24 hours than airlines using the hub-and-spoke route system.

In a December article, The Dallas Morning News contributor Alexandra Skores discussed the airline’s use of a point-to-point route system. She pointed out that up until deregulation in 1978, most airlines used the point-to-point route system,. So clearly, it has advantages.

However, December’s debacle demonstrates that even an absolutely marvelous scheduling system probably couldn’t have saved the airline from thousands of cancellations. That’s because the point-to-point model can put pilots and crews out of position during bad weather or busy periods.

Southwest has said it will spend $1 billion to fix its back-end technology. However, CNBC suggests that it will take the airline a year and a half to implement the new technology. Meanwhile, before then another storm could cause a debacle like the one this past December.

A second debacle could be fatal for LUV.

The other airlines, which mainly use hub-and-spoke systems, didn’t have nearly as many cancellations in December. For example, on Dec. 28, 90% of the flights canceled were Southwest flights.

The point-to-point route system bears significant responsibility for the holiday meltdown. Sure, Southwest underinvested in technology, and that’s a shame, but December highlighted the weak link of the point-to-point system.

With climate change producing bigger winter storms, investors should question why Southwest stuck with a point-to-point approach.


https://investorplace.com/2023/02/lu...rom-luv-stock/

Lewbronski

That’s perhaps the most important quote from the article loveislost7M8 posted. Up until recently, SWA has been considered risk-free in business terms. The idea of SWA going out of business was ludicrous. The idea SWA might furlough seemed far-fetched. The career security SWA promised was the nudge that made many people choose to come to SWA versus other places.

Is any of that really true anymore? Is SWA any less at risk of going out of business compared to other major airlines given all of the factors pointed out in loveislost’s article? Is it more at risk of going out of business? I think a rational argument could be made that it is more at risk of going out of business than other major airlines. Is SWA less likely to furlough anymore? Ask the 1,221 about that.

If you’re thinking about coming to SWA and “Security” is listed in the “pro” column of your pros and cons list, you might want to reconsider that idea.

Prospect

​​​​​​Are you a rational person who hasn't done research, or an irrational person who did research and came to illogical conclusions?

SWA threatened a furlough. Were they the only ones? Did anyone else actually follow through? (Yes, they did, while SWA did not.) What does SWA's debt ratio compared to peers tell you about their likelihood of going out of business? What do the post meltdown load factors tell you of how nearly fatal that incident supposedly was?

Give me a break.

Lewbronski

Once dominant companies that couldn’t keep up with the times: Sears, JC Penney, Blockbuster, Blackberry, MySpace, Xerox, Radio Shack. SWA?

MatthewAMEL

'It can't happen here' is a very real threat to any company.

In one 5-day period, SWA lost $800M. That was realized loses for one quarter. They have no way of calculating the impact of the 'book away' effect word of mouth from friends/family, the constant news coverage, or the endless posts on social media are having going forward.

It also sets the stage for the public to just assume any large cx/delay is just another SWA issue. Like last weekends JAX ARTCC debacle. All weekend long, customers and employees were asking if SWA was having another meltdown.

What the article is alluding to is SWA got it's 'mulligan'. Another event like XMas meltdown and the customers go elsewhere. It doesn't even have to be all of them. But if 30% book away, what does that do to SWAs plans? This airline must grow to survive.

Mozam

I wish I could be as optimistic as you. We have a CEO that I think is incompetent of tying his own shoes without being told to do so . We went through. 1.2B in less than a week, that takes some some talent to do so on the most profitable week of the year.

ILUVMYJOB

During Covid YES, SWA was the only one to threaten a furlough, and the only one to send letters, thus the infamous 1221. The other airlines (DAL, AA, UAL) worked with the unions to reduce guarantee and keep all pilots on board while the situation worked itself out. THERE WERE NO FURLOUGHS AT THE BIG THREE, nor were any furlough letters sent out! SWA also threatened their pilots with termination unless they were vaccinated while, DAL simply asked that you pay $200.00 per month to help cover the increased cost of medical care due to covid. These are the two things that Gary Kelly and Bob Jordan will never be forgiven for, and it will never be forgotten by the line pilots. EVER.

Give me a break.