SWA stock price

[swimmer]

I've been noticing that the SWA stock price has been dropping lately. Is this something to be concerned about? For a long while it was hovering at about $19-$20/share, but recently it is down to the $13-$14 range. Anyone that is a bit more savy on this issue care to ease my anxiety? I need something to think about as I'm swimming laps in the pool. Thanks

Swimmer

 

[dhampton]

I'm not a stock expert, but you might find comfort in knowing the rest of the market is also depressed.

 

[tredding@swa]

SWA stock

Uncertainty in the transportation sector is to blame. The "market" hates not feeling that it "knows" which direction the economy is heading in.

Every other airline is reporting massive losses this week, this causes a drag on all stocks in the same "sector". (see Dow Jones Transportation Index @ WSJ.com) Some stock analysts believe that LUV is also overpriced based on the current and/or future P/E of the stock.

Personally, I believe that LUV is cheap and would buy more if I had the funds to do so.

Have a great day! Tredding

 

[Maynard]

Cheap Stock

Buy, Buy, Buy!!!

 

[flydog]

It went down because I bought some. As soon as I sell it will go back up again.

 

[tredding@swa]

Rocks??

Hey Flydog,

Did you get rocks in your bag on Hallowen??

Please post here next time you decide to buy/sell any more stocks... perhaps we can profit from your misfortune!?!?!?

I am always searching for a "leading indicator", all help is great ly appreciated!!

Have a great day! Tredding

 

[norskman2]

obviously the whole market's been in a death spiral this month, but with SWA, here's a recent article from the Wall Street Journal. Analysts are concerned that:
- SWA's short-haul flights are being hurt because people can drive it faster because of all the security delays
- SWA is moving into longer-haul and cross-country flights, where they are succeediing, but they lose some of the cost advantage that comes from their legendary ability to do quick turnarounds
- concerns that the new labor contracts will bump up labor costs

tough to bet against SWA, given their track record, but hey, the market runs mostly on psychology, which is mostly negative thesedays anyways

FROM THE ARCHIVES: July 15, 2002

Southwest Turns More Aggressive
After Successful Growth Gamble

By MELANIE TROTTMAN
Staff Reporter of THE WALL STREET JOURNAL


Southwest Airlines was the only major airline that kept growing after Sept. 11, using its deep financial pockets to avoid layoffs and schedule cuts during the worst air-travel downturn in history.

So how did the gamble work out? Well enough that now Southwest is getting more aggressive.

Southwest was the only major U.S. carrier to post a profit for the year's first quarter. Analysts expect a repeat when airlines report second-quarter results this week, and Southwest's chief executive, Jim Parker, expects this year to be the 30th consecutive profitable one in the company's 31-year history. "We think things have turned out better than we feared they might," said Chief Financial Officer Gary Kelly.

With competitors pulling back, Southwest gained two points of market share in last year's fourth quarter to 11.5% of domestic traffic from 9.5%, Chairman Herb Kelleher says. Through June of this year, seat capacity at Southwest has grown 4.3%, and the carrier thus far has moved past US Airways Group Inc. as the nation's sixth-largest airline.

Mr. Kelly estimates competitors' seat capacity is down 5% to 10% from a year earlier in markets served by Southwest .UAL Corp.'s United Airlines has cut back shuttle service out of Los Angeles and Oakland, Calif., for example, but the biggest change has come in Baltimore as a result of the grounding of US Air's Metrojet subsidiary. Southwest has more than 43% of traffic in Baltimore, compared with 34% before Sept. 11, an airport spokeswoman said. US Air's market share dropped to 14% from nearly 29%.

Now, Southwest is getting even bolder by hitting at the heart of some of its big rivals, expanding into lucrative, long-haul business-travel routes with new, nonstop flights. The low-fare, low-cost carrier is strategically "connecting the dots" between key city pairs popular with business travelers who will no longer pay thousands of dollars for last-minute, unrestricted tickets sold on larger, higher-cost airlines.

Southwest often has tried to avoid head-to-head combat with powerful incumbents, but with the rest of the industry reeling and travelers hungry for bargains, the carrier sees new opportunity.

"We're trying to be wise, we're trying to be opportunistic," said Mr. Kelly, who added that Southwest hasn't seen a competitive response, though larger rivals do tend to match lower prices on a limited basis.

From Baltimore, Southwest will launch its first nonstop transcontinental service in September with flights to Los Angeles. Southwest's highest ticket for the service is $299 one-way; United's is $1,127 each way.

From Chicago's Midway Airport, Southwest has recently begun daily nonstop service to Oakland, Los Angeles, Seattle and San Diego, offering one-way walk-up fares as low as $199. That's roughly half of the lowest walk-up fares offered by AMR Corp.'s American Airlines, United and Delta Air Lines between Chicago and those West Coast cities.

"It's a perfect time [for Southwest ] to go into some of these markets," said Vivian Lee, a vice president at Alliance Capital, a large Southwest investor.

Southwest chose to expand from Chicago and Baltimore because it considered them low-risk cities where the airline already had a large following. What's more, adding longer-haul flights tends to broaden the airline's draw. After serving Nashville for 10 years with short- to medium-haul flights, for example, Southwest added Florida as a leisure destination. Suddenly, traffic jumped on some of its short-haul routes, such as Nashville-Chicago. The reason: Florida leisure travelers had also begun using Southwest for business trips.

After Sept. 11, investors and analysts fretted that the airline's bread-and-butter short-haul flights would suffer severely as many travelers drove cars instead of flying. At Dallas Love Field, a good measure of Southwest's short-haul performance, traffic was down 6% in May from a year earlier.

Mr. Kelly says short flights, including its Dallas operation, have held up relatively well given the tough economy. One reason: As airport hassles have risen, road-warriors are more open to flying out of the smaller, alternate airports Southwest tends to serve.

To be sure, the airline faces challenges as it grows. With labor pressure on several fronts, Southwest may find it harder to keep costs low. Southwest is currently in contract talks with its pilots, mechanics and flight attendants. The mechanics' union recently rejected a tentative contract and called for federal mediation.

The pilots union, in particular, has been demanding more pay while complaining their salaries fall short of their industry peers'. Southwest recently offered pilots an interim contract that would raise pay at least 20% during the next two years and extend the current contract for two years. A union spokesman has said the offer doesn't meet the ultimate goal of an industry-leading contract; voting is set to close on Aug. 19.

Mr. Parker declined to say how the proposed contract would affect unit costs, but Southwest's labor costs as a percentage of total operating costs have been rising, to nearly 40% now from less than one-third in the mid-1990s, said Ms. Lee of Alliance Capital. Southwest has managed to save in other areas, such as distribution costs helped by Internet bookings, she noted.

"In the near term, I'm not real worried about Southwest Airlines. However, if you look at the trend lines ... it's pretty easy to get worried even about Southwest Airlines longer term," Ms. Lee said.

Write to Melanie Trottman at [email protected]

Updated July 15, 2002

 

[ILS JNKY]

LUV

Well, Treddings post on SWA is correct to the extent that the market just cant seem to fiind a bottom at this time , and like always the transportation sector is the one that gets a good deal of short selling IE. the selling of postions that you don't own betting that it will go down even more.


I see things this way swa is a strong company the ceo has done some amaizing things for the company, compaired to some of the other companys out there to day.

Just looking back a few months ago to Delta and it was at $32.00 a share, now this past friday it traded at a low of $15.72 or so, lost half its value in 3 months .


The airline sector is some what hard to time , either in or out , the best way that i have found to hedge againts a major loss in this sector is to by leaps on the stock this way you can limit your risk, consirve capitial, and still show a gain when the stock moves back up, let it sit here and build a strong base the stock has good support at this level..................................

fly safe, invest smart