Southwest Airlines Will Fly Again
A history of bankruptcies in the airline industry has usually kept quality-focused investors away. It's no surprise that the capital-intensive, cyclical nature of the business lends itself to wild swings in stock prices during unexpected economic shocks. Southwest Airlines (NYSE: LUV), currently the most valuable U.S. carrier by market capitalization, has seen its stock fall 49% during the last three months as the coronavirus pandemic has essentially halted passenger air travel worldwide.
According to the TSA, air travel demand was down 92% in the first 18 days of May compared to the same time period last year. This broad-based drop has caused Southwest to post a $94 million loss in the quarter ended March 31st, the company's first quarterly loss since Q3 2011. The uncertainty of when things will return to any level of normalcy is seriously jeopardizing Southwest's impressive streak of annual profitability, which reached 47 consecutive years last year. Fiscal year 2020 could very well be the end of that. To make matters worse, CEO Gary Kelly warned of the possibility of "a dramatically smaller airline" if things do not improve. Southwest has never laid off an employee in its entire history. These are truly unprecedented times.
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Source Fool.com
